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What is Variance? A Comprehensive Guide to Its Legal Meaning
Definition & Meaning
Variance refers to the difference between an actual amount and a predetermined standard amount in various contexts, including accounting and statistics. In accounting, it typically measures the difference between actual costs and budgeted costs, which can be favorable (when actual costs are lower) or unfavorable (when actual costs exceed budgeted amounts). In statistics, variance quantifies the dispersion of data points in a dataset, calculated as the average of the squared deviations from the mean. Additionally, in land use, a zoning variance allows for exceptions to established regulations.
Table of content
Legal Use & context
Variance is used in several legal contexts, particularly in accounting and land use. In accounting, it helps organizations analyze financial performance and budget adherence. In land use, zoning variances are crucial for developers and property owners seeking exceptions to zoning laws. Users can manage some aspects of these processes themselves with legal templates available through US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Accounting Example: A company budgets $10,000 for materials but spends $12,000. This results in a $2,000 unfavorable variance, prompting management to investigate the cause.
Zoning Example: A property owner applies for a zoning variance to build a larger structure than allowed by local regulations, demonstrating the need for flexibility in land use planning.
State-by-state differences
Examples of state differences (not exhaustive):
State
Variance Process
California
Requires public hearings for zoning variances.
New York
Variances must demonstrate undue hardship to be granted.
Texas
Local zoning boards have discretion in variance approvals.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Deviation
A departure from a standard or expected value, often used interchangeably with variance but can refer to any difference.
Standard Cost
The predetermined cost of manufacturing a product, used as a benchmark for measuring variances.
Zoning Variance
An exception to zoning laws, allowing property use that differs from established regulations.
Common misunderstandings
What to do if this term applies to you
If you encounter a variance in your financial reports, review the underlying causes and consult with your accounting team to address any discrepancies. For zoning variances, research local regulations and consider using US Legal Forms to access templates for variance applications. If the situation is complex, seeking professional legal advice may be beneficial.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
Typical Fees: Varies by state and type of variance.
Jurisdiction: Varies by local government regulations.
Possible Penalties: May include fines or denial of variance applications.
Key takeaways
Frequently asked questions
A variance in accounting is the difference between actual costs and budgeted costs, which can be favorable or unfavorable.
Variance is calculated by determining the average of the squared differences from the mean of a dataset.
A zoning variance is an exception granted by local authorities that allows a property owner to use their land in a way that deviates from current zoning regulations.
Yes, many jurisdictions allow property owners to apply for zoning variances, often requiring specific forms and documentation.
Investigate the causes of the variance, consult your accounting team, and make necessary adjustments to improve future performance.