The Importance of Variance Analysis in a Manufacturing Company


The Importance of Variance Analysis in a Manufacturing Company


The success of a business organization very much depends on its decision making, planning and control by the management in charge of it. Management themselves also depend on some relevant, good, accurate, clearly purposes.

This information is also expected to be cost-effective (i.e. the cost of determining the information must not be in excess of the benefit to be derived from it).

It is conceived that any good functional organization management should be interested in the business performance evaluation and appraisal so that inherent variances are easily identified for decision making to plan and control the organization efficiently.


However, analysis of variances in an organization say manufacturing company as a topic is a way to resolve the fore mentioned inherent problem.


Variance analysis is an important area of study in manufacturing company for so many years back; there have problems of variance in the manufacturing companies, which have then become fundamental. The variances are usually arrived at due to the inadequacy of the company management to set up suitable standard or lack of adequate and relevant information.

To break the jinx of coming across variances in the manufacturing companies, such variances arrived at initially have to be analyzed and process as corrective measure to guide against any future variances.


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