Budget Variances

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    A budget to actual variance analysis is a process by which a company’s budget is compared to actual results and the reasons for the variance are interpreted. The purpose of all variance analysis is to provoke questions such as: Why did one division, product line or service perform better (or worse) than the others? Why did the Actual Cost incurred crossed the Standard Level?

    Understanding Budget Variances

    There are three primary causes of budget variance: errors, changing business conditions, and unmet expectations.


    Types of Budget Variance

    1. Adverse Variance

    It’s important to discuss adverse (or negative) budget variance further because of its damaging and potentially severe consequences for a business.

    One of the most common ways that a company experiences adverse budget variance is through poor estimations of future spendings. The company may assume that a project will cost less than it ends up costing, whether due to a lack of accurate information about costs or unexpected expenses. A company may also experience negative variance if it allows office or industry politics to dictate a target spending that is unreasonably low.

    2. Positive Variance

    Many companies report a positive budget variance. In order to do so, most companies establish a well-padded budget for individual projects or operations in general. They try to be as accurate as possible in allowing for expenses, with a built-in buffer of extra funds to guard against certain costs, namely:

    Need and Importance of Variance Analysis

    Application of Variance Analysis

    Frequently Asked Questions

    Most frequent Questions and Answers

    Yes, Zippyway is an Online Platform serving all over India. Thus, No matter where you doing your business, all you need is Internet Connection on your mobile or desktop and we are ready to get your job done.

    No, You don’t need to be physically present for the process. Zippyway is an Online Catering Platform, all you need is Internet Connection in your device and the required documents with you. We will get the job done even if you are present at the remotest location of India.

    In most of the cases, you will receive the final soft copy of Certificates (or the requisite document) over e-mail and in relevant cases, you will receive the hard copy through the post.

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