Regardless of whether a company uses the traditional costing approach or an activity-based costing approach,the process of performing variance analysis is similar.

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Regardless of the costing approach used, variance analysis involves comparing actual costs to expected costs for each cost element to determine the reasons for any discrepancies and identify areas for improvement. The basic steps and concepts of variance analysis are the same for both traditional costing and activity-based costing.

Regardless of Whether a Company Uses the Traditional Costing Approach