Lesson Plan

• Define variance and differentiate adverse from favourable variances.
• Calculate variance using actual and budgeted figures.
• Interpret the significance of variance signs for revenue and cost items.
• Analyse causes of adverse variances and suggest corrective actions.
• Apply variance analysis to a simple business decision.

• Projector and screen
• Whiteboard and markers
• Printed worksheet with budget tables
• Calculator for each pair
• Example variance data handout
• Sticky notes for group brainstorming

Begin with a quick poll: “What happens when a company sells more than expected?” Connect this to the concept of variances and explain that today’s lesson will explore how to identify and interpret adverse and favourable variances. Students will learn to calculate variances and use them to inform business decisions.

1. Do‑now (5’) – Short quiz on budget vs. actual figures.
2. Mini‑lecture (10’) – Define variance, present formula, differentiate adverse/favourable with examples.
3. Guided calculation (12’) – Work through the sample table and calculate variances together.
4. Interpretation activity (10’) – Pairs analyse the sign of variances for revenue vs. cost using the provided chart.
5. Investigation role‑play (10’) – Groups follow the 5‑step process to address an adverse variance scenario.
6. Check for understanding (3’) – Exit ticket: define an adverse variance and suggest one corrective action.

Lead a brief recap of the key points, stressing how variance signs affect profit. Students complete an exit ticket summarising how they would investigate an adverse variance. For homework, they create a variance analysis for a fictional product using the supplied data.