Variance analysis should be used ________.
A) to understand why variances arise and to improve future performance
B) as the sole source of information for performance evaluation
C) to punish employees that do not meet standards
D) to set the standards which are very easy to achieve to encourage employees to focus on meeting standards

Question

Quizplus · Accepted Answer

Variance analysis is a tool to understand why variances arise and to improve future performance. It helps to identify the root causes of the variance and enables organizations to take corrective actions to ensure that future performances meet or exceed expectations. It should not be used as the sole source of information for performance evaluation or to punish employees that do not meet standards. Similarly, setting the standards that are too easy to achieve may not result in encouraging employees to focus on meeting standards; rather, it may demotivate them.

Variance Analysis Should Be Used ________