Variance analysis facilitates the principle of "management by exception."

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Variance analysis compares actual results with budgeted/planned results, and identifies significant deviations or variances. By focusing only on significant variances, management can quickly identify areas that require attention and take necessary corrective action. This is the principle of "management by exception", where management focuses only on deviations that are significant and need attention, and delegates routine or expected matters to subordinates to handle independently.

Variance Analysis Facilitates the Principle of "Management by Exception