Variance Analysis

Variance Analysis: This video is one of a set of videos on the topic of management accounting, sometimes known as cost accounting, and this is one of the two branches of accountancy, the other being financial accounting.
One important exercise that management accounting provides is information to management regarding the performance of the company internally and identifying areas where intervention is required, and perhaps remedial action taken.
This may be illustrated through the use of budgets. In this case the management accountant may set up a budget for a particular activity. The amount of the budget will be approved by management and assigned to that account. It is then the function of the management accountant to monitor expenditure within that budget to ensure that it does not exceed the limit set by management.
This is known as variance analysis; it is the process by which accountants review expenditures against budgeted sums to see whether there has been an overspend or underspend on that particular item. This is an important control method within businesses.
As with all of our videos we tried to keep this as straightforward as possible.

Видео Variance Analysis канала Galton College