Part BAnalysis of variance is the quantitative investigation of the difference between actual and planned behavior. (Drury, C.,2012) It is used to maintain corporate control. Firstly, this essay will analyze the reason for the variance of sales, materials, labor and overhead separately, while the second part is the interrelationship between these variances. 1. Sales Variance The sales volume variance is the difference between the budgeted quantity and the standard quantity multiplied by standard margin. (Collier, PM, 2006) The variance is unfavorable because there are 200 budgeted units that have not been sold out. When the variance is favorable it means there is a shortage of inventory before the end of this period. The sales price variance is the differenceThe favorable variance can be caused by 1). The materials are easier to work with. 2). The use of skilled workers or the improvement of workers' skills exists through training and improving productivity through development. 3). More efficient production equipment was installed. The variance is negative in the a part which can be caused by 1). Use of raw materials in small quantities which are not easy to work with 2). New low-skilled labor causes inefficient production 3). The production equipment is old or there are some technical problems causing the productivity of the production equipment to decline. ( Collier, PM,(Collier, PM,2006) The advantages of ABC are:1. Extend the concept of cost behavior. ABC uses cost factor to interpret cost behavior and classify costs as variable cost short term, variable cost long term cost and fixed cost.2. Increase accuracy in product cost calculation Using ABC, direct materials and direct labor can be classified into products, manufacturing overhead will be classified into a homogeneous cost pool, then allocate production overheads based on reasonable distribution cost standards becomes more direct and specific leading to many traditional uncontrollable indirect costs into controllable direct costs the manager to make decisions real and abundant measurement information that helps the manager to make decisions with relevant costs (Drury, C., 2012) 4. Make the product more competitive. ABC pays more attention to product design, research and development and quantitative cost management. Improve competitiveness through the allocation of limited resources