What is Variance?

Definition

Variance Analysis, in managerial accounting, refers to the investigation of deviations in financial performance from the standards defined in organizational budgets. Variance analysis also serves as a tool of budgetary control by evaluation of performance by means of variances between budgeted amount, planned amount or standard amount and the actual amount incurred/sold. Variance analysis can be carried out for both costs and revenues.

Essential Elements of a Contract and Case Studies

An agreement must contain four essential elements to be regarded as a contract. If any one of them is missing, the agreement will not be legally binding.

Offer

There must be a definite, clearly stated offer to do something. For example: A quotation by sub-contractor to the main contractor and an offer to lease.

An offer does not include ball park estimates, requests for proposals, expressions of interest, or letters of intent.

Invitation to treat

Brief description of Independent and Mutual-exclusive projects

Independent project

An independent project is one where the decision to accept or reject the project has no effect on any other projects being considered by the company. For example the decision to replace a company's computer system would be considered independent of a decision to build a new factory. 

Mutually-exclusive Projects

A mutually-exclusive project is one where acceptance of such a project will have an effect on the acceptance of another project. In mutually exclusive projects, the cash flows of one project can have an impact on the cash flows of another. Starbucks decision to buy Teavana will most certainly have a profound effect on the future cash flows of the coffee business as well as influence the decision making process of other future projects undertaken by Starbucks.