Variance analysis explains the difference between planned costs and actual costs by evaluating differences between standard prices and actual prices and budgeted quantities and actual quantities.

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Variance analysis is a tool or technique used in budgeting and management accounting to explain the difference between planned or budgeted costs and actual costs by analyzing the differences between standard prices and actual prices and budgeted quantities and actual quantities. This helps in identifying the reasons behind the differences, whether they are due to changes in prices, quantity, or efficiency, and taking the necessary corrective actions to achieve the desired results.

Variance Analysis Explains the Difference Between Planned Costs and Actual