Types of Variances
Variances can be divided according to their effect or nature of the underlying amounts.
When effect of variance is concerned, there are two types of variances:
- When actual results are better than expected results given variance is described as favorable variance. In common use favorable variance is denoted by the letter F - usually in parentheses (F).
- When actual results are worse than expected results given variance is described as adverse variance, or unfavourable variance. In common use adverse variance is denoted by the letter U or the letter A - usually in parentheses (A).
The second typology (according to the nature of the underlying amount) is determined by the needs of users of the variance information and may include e.g.:
- Variable cost variances
- Direct material variances
- Direct labour variances
- Variable production overhead variances
- Fixed production overhead variances
- Sales variances
Read more about this topic: Variance (accounting)
Famous quotes containing the words types of and/or types:
“Science is intimately integrated with the whole social structure and cultural tradition. They mutually support one other—only in certain types of society can science flourish, and conversely without a continuous and healthy development and application of science such a society cannot function properly.”
—Talcott Parsons (1902–1979)
“The American man is a very simple and cheap mechanism. The American woman I find a complicated and expensive one. Contrasts of feminine types are possible. I am not absolutely sure that there is more than one American man.”
—Henry Brooks Adams (1838–1918)