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Unit 9: Variance Analysis
Notes
Figure 9.1: Classification of Variance
The variance can be classifi ed into two categories, based on controllability viz. controllable and
uncontrollable variance.
Figure 9.2: Classifications of Variances on the Bases of Controllability
The purpose of standard costing is to correct the variance, which is in between standard cost and
actual cost.
Self Assessment
Fill in the blanks:
1. If the actual cost is more than the standard cost, it is known as ……………… variance.
2. If the actual cost is less than the standard cost, it is termed as ………………
3. The purpose of ……………… is to correct the variance, which is in between standard cost
and actual cost.
4. Variance means the difference between the ……………… and the actual cost.
5. Variances of different cost items provide the key to ………………
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