Variance analysis is used to analyse performance and to promote management action at the earliest possible stage. The chapter provided illustration of the variances that can be calculated together with a brief interpretation of the possible causes of these variances. It also looked at some of the suggested limita tions of variance analysis.
You are required to critically evaluate the system of variance analysis being used in your own organization, or an organization with which you are familiar. For example, does the system of variance analysis currently being used in that organization help to promote the objectives of the organization? Are the standards which the organization uses to compare against actual up-to date? If the organization does not operate a system of variance analysis, would it be useful for the organization to start operating such a system? If not, explain the reasons why you consider a system of variance analysis is not appropriate for that particular organization. These are just some examples of the types of issues you might raise as part of your critical evaluation.