$BTC 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 staff. Standard costs are established as references, and the variances between actual and standard costs highlight areas requiring special attention. Supervisors are held accountable for these variances, which can be analyzed for materials, labor, and factory overhead. Variances serve 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.