It is obvious that management needs to understand the sources where certain variances arises. Whether it is a favorable or adverse variance, the said variance need to be investigated hence the need to understand the sources from where the variances arises. Below is tabulated some of the major variances and its sources:-
| Variances | Source |
| Sales PRICE | Actual selling price |
| Sales VOLUME | Actual units sold |
| Direct materials PRICE | Actual cost of materials |
| Direct materials USAGE | Actual usage of materials |
| Direct materials MIX | Material Mix |
| Direct materials YIELD | Actual output |
| Direct labor RATE | Actual labor rate |
| Direct labor EFFICIENCY | Actual productivity |
| Variable production overhead EFFICIENCY | Actual consumption per unit of output |
| Variable production overhead EXPENDITURE | Actual variable production overhead |
| Fixed production overhead EXPENDTIURE | Actual fixed production overhead |