Volume or Activity Variance: Difference between actual output and planned output.Cost or Spending Variance: Difference between actual costs and budgeted costs.Quality Control: Analyzing deviations in quality metrics to determine their causes and rectify them.Project Management: Comparing planned project timelines, costs, and deliverables against actual results to identify discrepancies. Operations Management: Assessing performance metrics like production volume, labor efficiency, material usage, etc., against expectations.Financial Analysis: Examining variances between actual and budgeted financial figures such as revenue, expenses, and income.For example, if you budget for your department to spend $100,000 a month, and the actual monthly spending is consistently $110,000, a variance analysis sets out to answer the question of why there is a difference of $10,000 between planned and actual spending. This analysis is used to maintain control over a business. Variance analysis is the quantitative investigation of the difference between actual and planned behavior.
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