What does a variance report compare?

A variance report is specifically designed to compare actual results to budgeted figures, allowing organizations to identify discrepancies and understand the reasons behind them. This comparison helps management evaluate performance relative to financial goals and operational plans. By analyzing variances, companies can make informed decisions to adjust strategies, allocate resources more effectively, and improve overall financial performance.

The essence of a variance report lies in its focus on identifying gaps between what was expected and what actually occurred, which can encompass various aspects of operations, such as revenues, expenses, and production efficiency. This information is critical for effective financial management and planning.

While other options mention comparisons that are relevant in different contexts, they do not align with the primary purpose of a variance report. For example, comparing company sales with competitor sales gives insights into market position but does not reveal budgetary performance. Likewise, assessing planned performance with actual employee evaluations focuses on human resource metrics rather than financial variances. The comparison of current to long-term assets pertains to liquidity and resource allocation rather than discrepancies between expected and actual financial performance.