A favorable variance indicates that a business has either generated more revenue than expected or incurred fewer expenses than expected. Juegos de casino gratis tragamonedas sin descargar. For an expense, this is the excess of a standard or budgeted amount over the actual amount incurred. When revenue is involved, a favorable variance is when the actual revenue recognized is greater than the standard or budgeted amount.
No data can be judged as good or bad on the basic of its variance. Variance is a measure of heterogeneity in a given data. Higher the variance, more heterogeneous is it and smaller the variance, more homogeneous is it.
The reporting of favorable (and unfavorable) variances is a key component of a command and control system, where the budget is the standard upon which performance is judged, and variances from that budget are either rewarded or penalized.
Obtaining a favorable variance (or, for that matter, an unfavorable variance) does not necessarily mean much, since it is based upon a budgeted or standard amount that may not be an indicator of good performance. In particular, favorable variances related to price (such as the labor rate variance and purchase price variance) are only derived from the difference between actual and expected prices paid, and so have no bearing at all on the underlying efficiency of a company's operations.
Budgets and standards are frequently based on politically-derived wrangling to see who can beat their baseline standards or budgets by the largest amount. Consequently, a large favorable variance may have been manufactured by setting an excessively low budget or standard. The one time when you should take note of a favorable (or unfavorable) variance is when it sharply diverges from the historical trend line, and the divergence was not caused by a change in the budget or standard.
- Variance is a description of how far members are from the mean, AND it judges each observation's importance by this same distance. This means observations far away are.
- A high variance, indicating relatively great variability, also indicates that the average is of minimal use in projecting future values for the data. Standard deviation is the square root of variance. Financial analysts use both statistical measures to weigh investment risk.
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S2 = variance
X = the numbers from your data set
N = the total number of numbers you have in your data set
The easiest way to compute variance with the computational formula is as follows:
A) List each of the numbers in your data set vertically & get the sum of that column
B) Figure out n (count how many numbers you have in your data set)
D)Subtract M from each number in your data set (Notice how the sum is zero)
E) Square the numbers you got for part D) and get the sum of that column
4 (4-4.2)= -0.2 (-0.2)2= 0.04
3 (3-4.2)= -1.2(-1.2)2= 1.44
What Does A High Variance Mean
9 (9-4.2)= 4.8(4.8)2= 23.04
2 (2-4.2)= -2.2(-2.2)2= 4.84
4 (4-4.2)= -0.2(-0.2)2= 0.04
Σ=42 Σ=0Σ=55.6
B): N=10
What Does Variance Tell You
![Mean Mean](https://www.researchgate.net/profile/Cynthia_Moss3/publication/246322309/figure/fig11/AS:669393348472835@1536607219189/An-illustration-of-variance-In-each-of-the-graphs-above-the-mean-number-of-droppings.png)
Now use the sum for part E), as well as the value for N which you found in part B) to fill in the formula:
What Does A High Variance Mean
Do the math and S2 = 5.56