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Variance analysis can be carried out for both costs and revenues. Variance analysis is usually associated with explaining the difference (or variance) between actual costs and the standard costs allowed for the good output. For example, the difference in materials costs can be divided into a materials price variance and a materials usage variance.
The assumption of linear property of total cost and total revenue relies on the assumption that unit variable cost and selling price are always constant. In real life it is valid within relevant range or period and likely to change.
This algorithm can easily be adapted to compute the variance of a finite population: simply divide by n instead of n − 1 on the last line.. Because SumSq and (Sum×Sum)/n can be very similar numbers, cancellation can lead to the precision of the result to be much less than the inherent precision of the floating-point arithmetic used to perform the computation.
There are two reasons actual sales can vary from planned sales: either the volume sold varied from the expected quantity, known as sales volume variance, or the price point at which units were sold differed from the expected price points, known as sales price variance. Both scenarios could also simultaneously contribute to the variance.
Realized variance or realised variance (RV, see spelling differences) is the sum of squared returns.For instance the RV can be the sum of squared daily returns for a particular month, which would yield a measure of price variation over this month.
In Cost-Volume-Profit Analysis, where it simplifies calculation of net income and, especially, break-even analysis.. Given the contribution margin, a manager can easily compute breakeven and target income sales, and make better decisions about whether to add or subtract a product line, about how to price a product or service, and about how to structure sales commissions or bonuses.
Since RevPAR is a measurement for a particular period of time (say a day, or month or year) it is most often compared to the same time frame. It is often used in comparison to competitors within a custom defined market, trading area, or advertising region or a self-selected competitive set as defined by the hotel's owner or manager, which is referred to as RevPAR Index or RGI (Revenue ...
The precise formula is a function of the central moments of the return distribution. [ 5 ] ) The mathematics behind the volatility tax is such that a very large portfolio loss has a disproportionate impact on the volatility tax that it pays and, as Spitznagel wrote, this is why the most effective risk mitigation focuses on large losses: