Why This Matters
Variance analysis converts the raw comparison of actuals to plan into actionable insight. Simply knowing that revenue is below budget does not tell management what to do; understanding whether the shortfall is driven by lower volumes, lower prices, or an adverse mix shift points to entirely different responses. Effective variance analysis decomposes deviations into their root causes, assigns accountability, and identifies where management attention and corrective action should focus.
Where This Fits
This term sits within the Performance & Profitability area of Performance & Control.