PAD 505 Week 8 Discussion 2 Variance analysis

Week 8 Discussion 2



Variance analysis

Variance analysis can be defined as a tool used in the control of a budget for instance, for revenues or costs by analyzing the performance using variances between the actual, and the budgeted amount. Finding the difference between the two costs, the standard and the actual costs allows the positive output. For instance, the costs of direct labor can be put into division to get the efficiency and the rate variance. Therefore variance analysis can generally be said to aid in the understanding of the current costs to be able to put future costs into control and this benefits the management of a given organization, (Eckerson, 2010). .

The first strategy that the administrators can put into application to ensure that the budget is performing according to the established performance indicators is the change of the organization. This is because when the companies have goals which are established, when their objectives are clearly defined and the productivity results are always put into display for everyone to see, the organization is also put into a positive direction. Performance can well be a clear indicator of the efforts that are being put by the individuals working in the organization. They get to know the ones who do not perform well and put them in a position to.

Another strategy is the performance management. It harness information technology to monitor the business execution and also assists the organizations to achieve their goals. Using metrics, they are also able to provide a measurement which guides them in gauging the effectiveness of the processes of management and strategy. Moreover, a performance management system supports the framework in the fact that it has the technical and the business architecture hence the metrics distills the strategy of the organization to serve its stakeholders. It enables them to take action, know the opportunities and the problems, evaluate their goals and come up with a decision. These are some of the actions the administrators ought to take in order to improve their performance generally.


Eckerson, W. W. (2010). Performance dashboards: measuring, monitoring, and managing your business. John Wiley & Sons.

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