Question

Is it important in variance analysis to understand what might cause a difference between actual and budgeted results?

A) Yes, understanding causes is crucial for effective variance analysis.
B) No, understanding causes is not relevant in variance analysis.
C) It depends on the specific context of the analysis.

Answer 1

Understanding causes is crucial for effective variance analysis in budgeting and financial management.

Step-by-step explanation:

Answer:

A) Yes, understanding causes is crucial for effective variance analysis.

Variance analysis is a technique used in budgeting and financial management to compare actual results with budgeted or expected results. It helps identify differences or variances between the two and analyze the reasons behind those variances. By understanding the causes of the differences, businesses can make informed decisions and take corrective actions to improve performance.