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Business Analysis with Microsoft® Excel, Second Edition by Conrad Carlberg

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Common-Sizing for Variance Analysis

The term variance analysis, in the context of finance and accounting, means the examination of differences between one set of numbers and another. For example, if your company's actual total salaries during the first quarter differ from its budgeted first quarter salaries, there is a variance between the budget and the actual results.

Common-sizing can help you do variance analysis more quickly and easily. Speed and facility in variance analysis are particularly important, because companies spend an enormous amount of time and effort examining the differences between their plans and their actual results and between prior and current results. Consider the following case study on New Way Tours, a travel agency. ...

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