Variance Analysis Essay example - 1253 Words

Leslie M. Rogakis HCA 240-0500 03/29/2015 Professor Tirizia York Variance Analysis A variable department manager has many factors to consider when interpreting and analyzing a variance report. Variances can be attributed to factors such as increased or decreased volume, wage increases, cost increases for equipment and cost increases for supplies. Variance reports are a tool that can be utilized to analyze how well a company is doing with meeting current budgetary goals as well as a means for forecasting information for future budgets. In preparing a variance analysis report to be presented to the vice president, the information needs to be simple enough to understand easily, but detailed enough for the information to be useful to†¦show more content†¦Companies will have set guidelines to trigger the need for a variance report such as variances over a specific percentage or dollar amount. (Cleverly, Song, Cleverly, 2011, Pg. 381) In an analysis of revenues, a negative variation is unfavorable; in an analysis of costs, a negative variatio n is favorable. (Dove Forthman, 1995) Variation is calculated by subtracting the expected or budgeted figure from the actual figure for each variable. The variable figure is then divided by the expected figure in order to establish a percentage of the variance. Wages that are over the budgeted amount would be an unfavorable variance and would be an indication that there is a need for a variance report. (Dove Forthman, 1995) Supply costs being less than the budgeted amount would be a favorable variance, however it could result in the supplies budget being reduced if there is not a reasonable explanation as to the cause for the variance. Therefore, a variable department manager would ask for a variance report detailing the reason for the variance to be completed, otherwise it appears as if the budget is overstated and needs to be reduced. Variance reporting is the responsibility of the variable department manager and requires further analysis of the variable figures in order to dete rmine a cause. A comparison between two periods is generally the most efficient way of performing this analysis and is most often compared with a prior similar period ofShow MoreRelatedVariance Analysis906 Words   |  4 PagesHCA 240 April, 29 2012 Moiz Lalani Variance Analysis Variance Analysis is used to promote management action in the earliest stages. It is the process of examining in detail each variance between actual and budgeted costs to conclude the reasons as to why the budgeted amount was not met (Ventureline, 2012). There are several factors that go into a variance report. One is the assumption of the department. The second is the risk of the assumption. And thirdly the actual expense used to portrayRead MoreVariance : Variance Analysis For 20031239 Words   |  5 PagesQ1. Variance analysis for 2003, 2004 is in excel file. In 2003 the actual sales revenue is less than the budgeted sales revenue by 3%. The reason for this is falling sales volume and not falling selling price. This is because quantity variance component of sales revenue flexible budget is higher than price variance component of sales revenue flexible budget. Moreover, cost of production variance is almost 7%. This is attributed to high variances of leather costs, finishing cost and manufacturingRead MoreMultivariate Analysis Of Variance And Multivariate Analysis2853 Words   |  12 PagesMULTIVARIATE ANALYSIS OF VARIANCE (MANOVA) Multivariate analysis of variance (MANOVA) is a statistical analysis used when a researcher wants to examine the effects of one or more independent variables on multiple dependent variables. 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The sales mix variance is unfavourable for Nylon Jackets and favourableRead MoreVariance Analysis938 Words   |  4 PagesVariance analysis Analysis of variance is a term used in statistics which involves a collection of statistical models and procedures that are associated with them where the observed variance in a particular variable is partitioned into components that can be attributed to different sources of variations. it is therefore a statistical technique that is useful for evaluation whether there are differences between average values or mean across several population groups, It can simply be definedRead MoreAnalysis of Variance: Anova680 Words   |  3 PagesAnalysis of variance (ANOVA): How and when it is used in research In statistics, variance refers to the comparison of the means of more than two groups. The term variance may mislead some students to think the technique is used to compare group variances. In fact, analysis of variance uses variance to cast inference on group means...Whether an observed difference between groups mean is surprising will depends on the spread (variance) of the observations within groups. Widely different averages