Which of the following best describes the goal of variance analysis?

The goal of variance analysis is to identify and understand performance discrepancies between expected and actual financial outcomes. This process involves comparing budgeted figures or standards to actual results to determine where variances have occurred and why.

By doing so, an organization can pinpoint areas that are performing better or worse than anticipated, enabling management to take corrective actions where necessary. Understanding these discrepancies can reveal underlying issues such as inefficiencies or unexpected changes in costs, allowing a business to make informed decisions to improve overall performance.

The focus is not solely on maximizing sales revenue, simplifying accounting processes, or streamlining cash flow; rather, it is about analyzing the differences in performance metrics to drive continuous improvement and strategic decision-making.