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Variance

Variance

Difference between the budgeted amount and the actual amount.

For example, companies use labor variances to see if the employees got the job done in the number of hours budgeted. If the company planned to pay laborers for four hours’ work at $9 an hour ($36) to finish a chair but they ended up paying for 4.5 hours at $10 ($45), the company has a total labor variance of $9. The amount they paid varied from the amount they expected to pay.

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