Variance analysis is an accounting term used in budgeting or management accounting in general. It is a tool of budgetary control by evaluation of performance by means of variances between budgeted amount, planned amount or standard amount and the actual amount incurred/sold. Variance analysis can be carried for both costs and revenues.
Variance analysis (in the real world and in my own dictionary) is the evaluation of how actual events played out as against planned events.
I will illustrate with an example
PLANNED EVENTS
Date: May 29th 2008
Venues: Home in Mafoluku, The Place in Ikeja GRA, Ada k’ ibe ya (Isi-ewu joint in Ajao Estate), Kusimo Street, Surulere (Roasted Fish Joint), Nwanyi Ibuzor (Local joint near my house)
Activities: Visit all the joints mentioned above pre-arranged by friends and call other friends who live around the joints to join me there for a celebration
ACTUAL EVENTS
Date: May 29th 2008
Venues: Home in Mafoluku, Office in Victoria Island,
Activities: Left home by 8 am for office (..and it was supposed to be a public holiday), work till 6pm, receive a bad evaluation, received no birthday gifts (well apart from Chweety of course)
Going from the above parameters, and using my own definition of Variance analysis; this was by far the worst birthday I have had in ages.
Thank you Chweety for making it memorable and for those who forgot to wish me happy birthday, I will get y’all.
But heyy….looking on the bright side, it saved me money
