Variance Analysis Interactive Model

Variances are introduced in Chapter 6 as the difference between actual outcomes and a standard. They are commonly used to provide guidance in cost reduction and productivity improvement. Variance Analysis is a common method used to isolate variances. The Variance Analysis Interactive Model model demonstrates how a price variance (the difference between actual price and standard price), and usage variance (the difference between actual usage quantity and standard usage quantity) affect the total variance. The user can change both actual and standard price and quantity by dragging the top edges of four bars.