Which statement about Variance is correct?

Which statement about Variance is correct?

• A. Theoretical Usage - Actual Usage = Variance
• B. Actual Usage / Theoretical Usage = Variance
• C. Actual Usage x Theoretical Usage = Variance
• D. Actual Usage - Theoretical Usage = Variance

Answer: (D)

Variance is a measure of how much actual results differ from what was planned. In practice, theoretical usage represents what should have been used based on recipes and forecasts, while actual usage is what was actually used. Subtracting the theoretical amount from the actual amount gives a variance with the same units as the quantities you’re tracking, and it directly shows overage or underage. If you used more than planned, the variance is positive; if you used less, it’s negative. The subtraction form is the standard way to capture this deviation, whereas flipping the order or using multiplication or division doesn’t reflect how variance is defined. So the statement that Actual Usage minus Theoretical Usage equals Variance is the correct one.

Variance is a measure of how much actual results differ from what was planned. In practice, theoretical usage represents what should have been used based on recipes and forecasts, while actual usage is what was actually used. Subtracting the theoretical amount from the actual amount gives a variance with the same units as the quantities you’re tracking, and it directly shows overage or underage. If you used more than planned, the variance is positive; if you used less, it’s negative. The subtraction form is the standard way to capture this deviation, whereas flipping the order or using multiplication or division doesn’t reflect how variance is defined. So the statement that Actual Usage minus Theoretical Usage equals Variance is the correct one.