JAIIB | AFM | CASE STUDY ON VARIANCE ANALYSIS

The Variance Analysis is a major concept covered in the Accounting and Financial Management (AFM) module of the Junior Associate of Indian Institute of Bankers (JAIIB) exam. It plays an important role in financial control and decision-making for businesses and banking institutions. Understanding this topic is essential for JAIIB aspirants to gain insights into how businesses monitor their performance against financial plans. Learning Sessions will take you through this article and delve into the significance of variance analysis, along with a case study to depict its relevance.

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Variance analysis is the process of calculating the difference between actual financial performance and budgeted or expected performance. It helps management to understand why certain costs, revenues, or profit levels deviate from the standard or expected amounts, offering insights for corrective actions.

For the extensive preparation of candidates, get details through our YouTube videos for JAIIB AFM Module wise Syllabus with explanations and tips to help candidates in their preparation journey.

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The basic formula for variance is:

Variance=Actual Value−Standard/Budgeted Value

In simple terms, variance analysis specifies the gap between what was expected and what actually happened, allowing managers to investigate and adjust business strategies accordingly.

Considering the different types of variances is important for JAIIB candidates. Variances can be categorized primarily into two groups:

• Cost Variances
• Revenue and Profit Variances

In the end, Variance analysis is a dynamic financial management tool that helps businesses and banks monitor their actual performance against expectations. For JAIIB candidates, mastering variance analysis is essential for understanding cost management, profit maximization, and operational efficiency within the banking sector. The ability to perform variance analysis helps banking professionals spot financial discrepancies early, enabling them to take corrective measures that benefit their institutions in the long run. As part of the AFM module, understanding variance analysis will not only prepare candidates for the JAIIB exam but also enhance their financial decision-making capabilities in real-world scenarios. Learning Sessions provides additional information about JAIIB AFM PROCESS COSTING by giving examples of real life scenarios.

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