Essay about Variance Analysis

1032 WordsJan 31, 20155 Pages
Variance Analysis HCA-530 Sue P. Gombio Grand Canyon University Variance Analysis is utilized to support the management during the initial stages. It is the procedure of investigating each variance between the actual and budgeted costs to determine the reasons as to why the planned amount was not met, in more detailed explanation (Ventureline, 2012). There are several influences that contribute to the variance report and one is the department’s assumptions, second is the possible risk for this assumption, and third is the actual expense used for the budget. Let’s say the CEO or Director announces the monthly budget that the department needs to meet. Once the department receives the monthly budget outcomes, the budget…show more content…
Given that the employees are being paid with a certain amount or rate every pay period makes it easy for the department manager to predict how much budget is needed to be able to pay all the staff. But then, there could be some risks for this kind of assumption like annual pay raises depending on the employees annual performance report, hiring new employees to assist the department (especially if the department is continuously growing). The department manager could either exceed or go under the monthly budget for the department, depending on the situation (Heisinger & Hoyle, 2012). During the preparation for the variance report to the CEO or Director, the manager should include the reasons as to why the budget is either over or under the given budget for the department for the month, especially when employees receive certain incentives in regards to their work performance or length of tenure. Normally, employee pay raises goes up from 2.9% to 3% for the year 2015 (Strauss, 2014). The department manager needs to include the reason or reasons as to why the variance amount was high for the month. In cases where the manager needs to hire a new employee to assist the growing department, they would need to get approval from the CEO or Director to determine if hiring a new employee is within their budget, and once the proposal for hiring is approved, the manager could start with the hiring

More about Essay about Variance Analysis

Open Document