Defining Variance Analysis
Variance analysis is used to assess the degree to which actual behavior varied from what was anticipated when comparing actual behavior to what was expected. This kind of research is intended to keep a business in check by analyzing areas where things went wrong unexpectedly. For example, if your projected sales are $10,000 and your actual sales are $8,000, there will be a $2,000 difference, according to the variance analysis. Variance analysis is particularly useful when looking at the amount of variation on a trend line since abrupt changes in the variance level from one month to the next are more apparent. The examination of these disparities in the context of variance analysis offers a description of …