No, managers should not only investigate unfavorable variances; they should also pay attention to favorable variances.
When it comes to managing a business, understanding variances—differences between expected and actual performance—is crucial. While unfavorable variances indicate areas where performance has not met expectations and can suggest problems that need addressing, favorable variances highlight successes and opportunities that can be leveraged for further growth.
Investigating unfavorable variances alone could lead to a limited perspective. By exploring both types of variances, managers can identify not only what is going wrong but also what is working well. This holistic view enables the organization to reinforce successful strategies and practices while addressing challenges.
Additionally, understanding the reasons behind favorable variances allows for the replication of successful processes in other areas of the business. So, it’s beneficial for managers to analyze both favorable and unfavorable variances for a comprehensive understanding of business operations.