IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 10 NO. 9 2024
DOI: 10.56201/jafm.v10.no9.2024.pg259.268

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A Systematic Review on Variance Analysis as a Manufacturing Tool for Corporate Decision Making

ALLI-MOMOH Betty Oluwayemisi PhD, OGUNYEMI Olajide Daniel, AKINOLA Oluwakemi Olanike, DADA Oluwagbenga, ADEBOWALE Adeniyi, OLADAPO Moses, SALAUDEEN Aishat

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Abstract

Variance analysis plays a crucial role in evaluating deviations from expected budgetary outcomes and informing strategic corporate decisions. This study focused on exploring the effectiveness of using variance analysis to enhance strategic decision-making, improve resource distribution, and boost cost management. Grounded in resource-based theory, the research delved into a wide range of academic literature and professional accounting insights. Employing a theoretical survey approach, the study examined an array of secondary data sources, including online databases, journal articles, and other publications. The findings revealed that variance analysis is instrumental for corporate leaders, acting as a navigational aid in the allocation of resources, making operational adjustments, and planning strategically. Utilizing this tool in manufacturing allows companies to increase operational effectiveness and manage costs more efficiently, establishing a strong base for ongoing competitive success. The research concluded that variance analysis is not only a tool for assessing performance but also a critical element in facilitating complex decision-making processes in contemporary manufacturing settings. Recommendations from the study include the integration of variance analysis with business intelligence (BI) and analytics tools to further enhance its effectiveness in corporate settings.

keywords:

Decision making, variance analysis, resource-based theory

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