The Need for Variance Analysis Term Paper Example | Topics and Well Written Essays - 500 words

The Need for Variance Analysis - Term report card ExampleBaker and Baker (2014) define variance as The difference between standard and real prices and quantities (p. 201), and variance analysis as Analysis of these differences (p. 201). Variance analysis underscores or brings attention to deviations from what was initially intended. It is still after deviations have been identified that adequate and effective decisions can be made by the individuals in management positions (Baker and Baker, 2014). According to Berger (2011), lack of conducting a variance analysis may prompt leaders to disregard areas do these deviations and hence fail to make relevant decisions. For variance analysis to be performed, a precedent formulation of standards ought to be conducted, for instance, budgetary targets (Baker and Baker, 2014). This shows that variance analysis drives managers and other leaders to set targets or standards in advance. Decision making goes hand-in-hand with accountability in that individuals overseeing areas proved by the variance analysis to be causing the variations are answerable. in that locationfore, departmental heads are forced to make effective decisions and implement relevant strategies that forces them to operate in spite of appearance the budget (Berger, 2011).In the case study, new procedures for discharging patients have been implemented. A variance analysis conducted after 6 months showed that costs were running 25 percent higher than was expected. After conducting the variance and proving that there is actually a deviation from the budget by 25 percent, the next step would be to identify the rushs of the deviation (Berger, 2011). There are many areas that may cause the deviation, for instance, extended working hours that increase the cost of labor. After identifying the cause of the deviation, then my next step would be to evaluate action plans under implementation to determine their forte and investigate how they can be improved (Be rger, 2011). If the action plans