#USChinaTradeTalks Importance of Variance analysis??

Variance analysis is important for controlling production costs, as it helps management understand the effectiveness of production efforts and the performance of supervisory personnel. Standard costs are set as benchmarks, and variances between actual and standard costs highlight areas that need attention. Supervisors are held accountable for these variances, and they can be analyzed for materials, labor, and factory overheads. Variances act as a starting point for further analysis and action, allowing management to make adjustments, eliminate undesirable variances, and encourage desired performance. Thus, variance analysis is a tool for effective cost control.