Variance investigation
Variance investigation identifies which differences deserve attention and seeks evidence about their causes and consequences. Consider size, recurrence, trend, controllability, standard reliability, interdependence and the cost and benefit of investigation. Both favourable and adverse variances can signal issues. Use the analysis to improve actions or assumptions rather than automatically assign blame. A significant result may be explained by a deliberate decision to protect quality or respond to a changed market.
Worked example
A $500 adverse material-price variance may merit little attention if caused by a documented market rise, while repeated small usage differences can reveal a costly process defect.
Common mistake
A favourable price variance can hide inferior quality and adverse yield. Investigating only adverse totals may miss the larger problem.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| ACCA | PM | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
