Variance Is a Diagnosis
Explain an unfavorable variance by separating price, volume, timing, and mix before recommending a budget action.
Variance is a question: what changed, and what should change next? Separate the Cause Start with the total variance, then break it into causes. Price variance means the rate, unit cost, or vendor price changed. Volume variance means the activity level changed. Timing variance means the cost belongs to a different period than budgeted. Mix variance means the blend of resources, products, channels, or customer types changed. Match Cause to Action A price variance might call for procurement, vendor renegotiation, or accepting a market rate. A volume variance might require a forecast update because the business is larger than expected.…
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