Page 66 - APM Integrated Workbook STUDENT S18-J19

Chapter 3

Recap of variances

1 Standards are set 2 Actual
based on what is performance is
expected to measured.
happen.

In PM you learnt
that:

4 Significant 3 Variance analysis
variances are compares actual
investigated and results with the
appropriate action ‘flexed’ standard.
taken.

Note: Review the variances covered in PM to ensure you are comfortable with the
calculation and the interpretation of each variance.

4.1 Recap of planning and operational variances

Traditional variance
calculated can be split

Planning variance Operational variance

 Compares original budget  Compares actual result with
with revised budget. revised budget.

 Not controllable by  Managers can concentrate
managers. on the operational matters
for which they are
responsible.

There must be a genuine reason for restating the budget.

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