ACCA PM Syllabus D. Budgeting And Control - Planning and Operational Variances for sales - Notes ^{1 / 4}

We can divide the total variance into:

1. Planning variances (or revision variances) 
    
   Are variances which have arisen because of inaccurate planning or faulty standards

   A planning variance compares an original standard with a revised standard that should or would have been used if planners had known in advance what was going to happen. 

   A planning variance is deemed not controllable by management.

   i.e. management may not be held responsible.

2. Operational variances (or operating variance) 

   Are variances which have been caused by adverse or favourable operational performance, compared with a standard which has been revised in hindsight.

   An operational variance compares an actual result with the revised standard. 

   It is deemed controllable by management. 

   Hence, management is held responsible for operational variances.

For sales, two variances have to be calculated

Planning – market volume/size variance

Operational – market share variance