- instatisticsmeasure of a dispersion of probability distribution. It is the square of the standard deviationFor example, if the standard deviation is 20, the variance is 400.
- difference of revenues, costs, and profit from the planned amounts. One of the most important phases of responsibility accounting is establishing standards in costs, revenues, and profit and establishing performance by comparing actual amounts with the standard amounts. The differences (variances) are calculated for each responsibility center, analyzed, and unfavorable variances are investigated for possible remedial action.
- in cost accounting,deviation between the actual cost and the standard cost. If actual cost exceeds standard cost, an unfavorable variance exists. A variance can be calculated for different cost items such as manufacturing costs (i.e., direct material, direct labor, and overhead), selling expenses, and administrative expenses. The reasons for a variance should be identified and corrective action taken. For example, actual production is 80 units. Standard cost per unit is $5 while actual cost per unit is $6. The unfavorable variance equals $80 ($400 vs $480).
Accounting: difference between actual cost and standard cost in the categories of direct material, direct labor, and direct overhead.
Finance: (1) difference between corresponding items on a comparative balance sheet and profit and loss statement; (2) difference between actual experience and budgeted or projected experience in any financial category.
Statistics: measure of the dispersion of a distribution. It is the sum of the squares of the deviations from the mean. See also standard deviation.
Zoning: exemption from the application of a zoning ordinance or regulation, permitting a use that varies from that otherwise permitted. The exception is granted by the appropriate authority in special circumstances to protect against undue hardship wrought by strict enforcement. See also nonconforming use.
Accounting: difference between actual cost and standard cost in the categories of direct material, direct labor, and direct overhead. A positive variation (when the actual cost is lower than the standard or anticipated cost) would translate into a higher profit unless offset by negative variances elsewhere.
Finance: (1) difference between corresponding items on a comparative balance sheet and Profit and Loss Statement. (2) difference between actual experience and budgeted or projected experience in any financial category. For example, if sales were projected to be $2 million for a period and were actually $2.5 million, there would be a positive variance of $500,000 or 25%.
Real estate: allowed exception to zoning rules. If a particular neighborhood were zoned for residential use only, a person wanting to open a store would need to be granted a variance from the zoning board in order to proceed.
Statistics: measure of the dispersion of a distribution. It is the sum of the squares of the deviation from the mean.
permission granted by a zoning authority to a property owner to allow for a specified violation of the zoning requirements. Variances are generally granted when compliance is impossible without rendering the property virtually unusable.
Example: Sherman owns a lot that is zoned for low- density housing. Because of the peculiar shape and topography of the lot, Sherman cannot build a home with the required minimum floor area without violating the setback requirements for the area. Sherman may be granted a variance to either construct a smaller dwelling or encroach on the setback line.