Sitxfin

‘Analysis’ is003
just anotherAssessme…
word for ‘Investigation’ – this means you dig deep into the activities behind
the information on your Budget to discover the reasons this variance arose; Many many things in
business can change on a daily basis, this is a process of narrowing down exactly what has changed so
you can understand how it is impacting your business and what to do about it.
 Was there a good/bad decision?
 Did the market change?
 Have prices moved?
 Are customers’ needs different?
Once you have made an analysis, and drawn some conclusions, you can then make tweaks and changes
to get your business on track. The following 5 tips walk you through the analysis path so you can
pinpoint your variance and work out what to do next.

Question 13
LIST 2 FACTORS THAT CAN CAUSE VARIANCES IN STAFF BUDGETS.
Variance
Possible Causes Compensating Action

Higher production Increased production None required if increase in production is due to

costs volume increased sales

Increase in price of raw Increase selling prices, reduce other expenses

materials or labor

Timing differences None required

create artificial variance

Lower revenues Fewer units sold Reduce fixed expenses and/or increase
promotion activities

SIT Version 1 9 of 11
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Lower selling prices Reduce expenses or increase selling prices