Putting It Together: Cost Variance Analysis

So in Module 9 we prepared the budgets for Hupana Running Company. In Module 10, we put those budgets to work, as Mary, our production manager and Ben, our purchasing manager worked through a variety of issues and challenges to maintain profitability.

So, as you may now see, the budget is the first step of a very important process. Without using experience and analysis, the budget is just a piece of paper. What we do with that piece of paper, and how we use it to improve our company is the goal.

How can we make that happen?

  • Finding the best raw materials at the best price (even if it is higher than budgeted, but reduces production time).
  • Hiring great people and training them well. Keeping them involved in the processes of budgeting and analyzing. They know what they do and how they do it!
  • Maintaining the equipment to limit downtime.
  • Using the budget as a living tool, that we can use to evaluate the health and profitability of our company!

So how important is analyzing costs, processes and systems?


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