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## What is the purpose of a variance report?

A variance report is a document that compares planned financial outcomes with the actual financial outcome. In other words: a variance report compares what was supposed to happen with what happened. Usually, variance reports are used to **analyze the difference between budgets and actual performance**.

## How do you explain a variance report?

A variance report is one of the most commonly used accounting tools. It is **essentially the difference between the budgeted amount and the actual, expense or revenue**. A variance report highlights two separate values and the extent of difference between the two.

## How often are variance reports done?

You should perform budget variance analysis on a **quarterly basis** at the very least. And in more tumultuous climates, more often than that. In the wake of COVID-19 restrictions in Q2 of 2020, we increased our forecasting and analysis to a weekly basis.

## What is variance and why is it important?

Variance is **a measurement of the spread between numbers in a data set**. Investors use variance to see how much risk an investment carries and whether it will be profitable. Variance is also used to compare the relative performance of each asset in a portfolio to achieve the best asset allocation.

## What factors should be considered when writing a variance report?

**When deciding which variances to investigate, the following factors should be considered**

- Reliability and accuracy of the figures. …
- Materiality. …
- Possible interdependencies of variances. …
- The inherent variability of the cost or revenue. …
- Adverse or favourable? …
- Trends in variances. …
- Controllability/probability of correction.

## What variance means?

1 : **the fact, quality, or state of being variable or variant** : difference, variation yearly variance in crops. 2 : the fact or state of being in disagreement : dissension, dispute. 3 : a disagreement between two parts of the same legal proceeding that must be consonant.

## What is a variance report in property management?

A variance analysis is **the periodic review of actual business results and comparison of them to management’s approved budget**. The analysis shows the degree of discrepancy between budgets and actual results with explanations of reasons for the discrepancies.

## How can variances be corrected?

For example, if your budgeted expenses were $200,000 but your actual costs were $250,000, your unfavorable variance would be $50,000 or 25 percent. Often budget variances can be eliminated by analyzing your expenses and allocating an expensed item to another budget line.

## How much variance is acceptable?

It **should not be less than 60%**. If the variance explained is 35%, it shows the data is not useful, and may need to revisit measures, and even the data collection process. If the variance explained is less than 60%, there are most likely chances of more factors showing up than the expected factors in a model.

## How do you find the variance of a report?

**Material Cost Variance = Standard Cost – Actual Cost**

- Material Cost Variance = Standard Cost – Actual Cost.
- Material Cost Variance = Rs (800000 – 839000)
- Material Cost Variance = Rs 390000 (Adverse)