ECONOMICS

Detailed explanation-1: -Variance analysis will let managers and cost analysts see if the budgeted costs and requirements for an operation accurately forecasted the actual costs and requirements of the operation. Often, you will find variance between the budgeted requirements and the actual requirements.

Detailed explanation-2: -Managers use variance analysis to measure and analyze what has already occurred in the company’s activity, since variance analysis requires managers to use actual company performance.

Detailed explanation-3: -Variance analysis compares standard to actual performance. It can be done by division, department, program, product, territory, or any other responsibility unit. By questioning the variances and trying to find answers, the manager can make the operation more efficient and less costly.

Detailed explanation-4: -Answer: Managers typically establish criteria to determine which variances to focus on rather than simply investigating all variances. This is called management by exception. Management by exception. describes managers who focus solely on variances that are significant.