Applying Variance Analysis for Cost Control

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The pricing strategies that you can use here can include cost-plus pricing, value-based pricing, or dynamic pricing.


When we talk about a ‘variance’, we’re looking at the difference between the budget and the actual costs. It’s a useful tool for managers to spot areas that might need a bit of attention.

It’s a good idea for a company to check these differences every month for all honduras phone number list the money coming in and going out. Usually, they’ll focus on the biggest differences first, as these are likely to have the most impact on how the company’s doing overall.

Let’s say, for example, a furniture company finds they’ve spent ₹3,75,000 more on materials than they planned. That’s quite a big unfavourable variance! They might want to look around for other suppliers who can offer better prices. This could help them avoid overspending in the future.

Some businesses do things slightly differently. They look at which costs that have the largest variance from the decided budget, percentage-wise, rather than just focusing on the biggest amounts.