What is a variance report primarily used for?

A variance report is a crucial tool used primarily to highlight discrepancies between planned financial performance and actual results. It focuses on identifying items that are significantly over or under budget, which allows management to understand where their financial projections did not align with reality. This can help in making informed decisions about resource allocation, identifying areas for cost control, and strategizing for future budgets.

The emphasis of a variance report on financial metrics makes it valuable for financial analysis and planning. It serves as a guide to address specific areas of concern, thus directly impacting the effective management of a business's financial health. Understanding these variances also aids in refining budget forecasts and enhancing overall operational efficiency.