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What is the difference between Planning Variances and Operating Variances?

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Question added by Jamal Najamuddin , Assistant Manager Audit , Punjab Saaf Pani Company
Date Posted: 2014/09/25
MUDDASSER ALI
by MUDDASSER ALI , Manager Accounts , M/s Ghulam Muhammad & Sons (GMS (Pvt) Ltd). (Autoparts Manufacturing Concern)

Dear Mr.Jamal,

First of all,i am thankful to you for giving me an appoutunity to answer your question.

Planning Variance is related to the poor /improper budgeting and planning.for eg, while making Standards we ignore the proposed(near to actual) quantity to be used in making a product. we overapplied or underapplied the said qty and in this aftermath,the whole variance shows depicts wrong picture.

On the other hand operation variance is pertained to unexpected / unpredicable circumstances.which are not in our hands.for eg,sudden increase in raw material prices due to inflation or increase in oil prices or due to clamities.

 

Thus planning variance is controlable when it is prepared with sound judgement.

While Opertional varinace is emerged due to unexpected events

Sriram Devarajan
by Sriram Devarajan , Senior Planning Engineer , BHARAT HEAVY ELECTIRCALS LTD. (BHEL)

Planning variance can be controlled to some extent by applying proper tools & techniques. But operating variance cannot be controlled over a certain limit.

Ahmed Maher
by Ahmed Maher , Admins , Crown Nile

Thanks Mr. Najum Aldin for your invitation

i think the simple Answer is 

Planning variance is the difference between the Budget and Actual

Operation Variance is the difference between the actual and standard

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