As FP&A professionals, we’re tasked with relating the story of the business to the numbers in the P&L. Often, however, the story has many twists and turns that can be hard to break down. Seeing average cost per unit rising drastically over a short period of time can be alarming, but breaking it into the component (i.e. rate, volume, mix, etc.) can help us understand whether the change is a matter of poor management or favorable shift in business volume. One of my favorite ways to present variance analysis is by breaking the variances down to their components – or drivers. For instance, in a manufacturing scenario, your drivers of expense might be wages & benefits, material costs, and hours worked. I’ve broken such a scenario down for you below which can explain the approach. In this scenario, a manufacturer ran production for an order of one of its products Budget Production Cost $73,000 Actual Production Cost $71,100 Cost Higher/(Lower) ($1,900) On the surface, p