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Variance analysis, in budgeting or management accounting in general, is a tool of budgetary control and performance evaluation, assessing any variances between the budgeted, planned, or standard amount, and the actual amount realized. Variance analysis can be carried out for both costs and revenues.
Analysers consider two types of variances: adverse variance and favourable variance. Adverse variance "exists when the difference between the budgeted and actual figure leads to a lower than expected profit". [14] Favourable variance "exists when the difference between the budgeted and actual figure leads to a higher than expected profit". [14]
According to the PMBOK (7th edition) by the Project Management Institute (PMI), Cost variance (CV) is a "The amount of budget deficit or surplus at a given point in time, expressed as the difference between the earned value and the actual cost." [19] Cost variance compares the estimated cost of a deliverable with the actual cost. [20]
Sales variance is the difference between actual sales and budgeted sales. [1] It is used to measure the performance of a sales function, and/or analyze business results to better understand market conditions.
Price variance (Vmp) is a term used in cost accounting which denotes the difference between the expected cost of an item (standard cost) and the actual cost at the time of purchase. [1] The price of an item is often affected by the quantity of items ordered, and this is taken into consideration.
In variance analysis (accounting) direct material total variance is the difference between the actual cost of actual number of units produced and its budgeted cost in terms of material. Direct material total variance can be divided into two components: the direct material price variance, the direct material usage variance.
Bell’s move wasn’t exactly like Chastain’s. But that wasn’t good enough for NASCAR, who put Byron back into the championship finale at Bell’s expense.
Examples of fixed costs include the depreciation of plant and equipment, and the cost of departments such as maintenance, tooling, production control, purchasing, quality control, storage and handling, plant supervision and engineering. [4] In the early nineteenth century, these costs were of little importance to most businesses.