Page 43 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
your revenue across consistent accounting periods, one
can compare it over time and assess the nancial
performance of the organisation.It is also found that
majority 68% of the respondents conduct variance
analysis periodically. It is evident that variance analysis
helps maintain control over a project's expenses by
monitoring planned versus actual costs. Effective
variance analysis can help a company spot trends,
issues, opportunities, and threats to short-term or long-
term success.

The perception of the respondent business units towards
the degree of importance of the types of variances
(Figure No.7), such as material, labour, overhead and
sales, has been identied with the help of Five-point
Likert scale with the corresponding scores ranging from
Very Important (5) to Not at all important (1).
Figure No. 10 - Importance of Variance Analysis

The analysis says that Majority (43%) of the respondent
business units considered material variance analysis to
be very important for the cost controlling of the business.
The majority of the respondents realised the signicance
of material variance and majority of MSME units used it
for the cost controlling of management by keeping check
over the quantity of material used, and actual price paid
for the material for a particular period.