Budget variances indicate planning failures, execution problems, or external factors affecting performance. This investigation determines which explanation applies to each variance and what actions should follow.

The investigation begins with variance calculation at multiple levels of detail. Summary variances are broken down into component parts to isolate specific causes rather than accepting broad explanations.

Revenue variances are separated into volume effects and price effects. This distinction matters because different management responses are required for each type of deviation.

Expense variances receive similar treatment. The investigation determines whether overruns stem from volume changes, rate increases, or inefficiency in resource consumption.

Timing differences are distinguished from permanent variances. Some deviations simply reflect delays or accelerations rather than fundamental changes in financial performance.

The investigation concludes with recommendations for both corrective action and budget process improvement. Future forecasts become more reliable when variance patterns are understood and addressed.