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**What do you mean by Combined Variance Analysis?**

Combined Variance Analysis refers to the ways in which a combination of different variances can be used for analysis. The typical analysis methods are

- Two-way Variance Analysis
- Three-way Variance Analysis
- Four-way Variance Analysis

**Explanation of different types of analysis to get rid of any hesitation **

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**Two-Way Variance Analysis**

This consists of two different types:

Budget Variance, which is a combination of variable spending variance, variable efficiency variance and fixed budget variance, can be defined as the difference between the actual cost and the budgeted cost for standard inputs

Volume Variance, which is the difference between the Budgeted Fixed Overhead and the Applied Fixed Overhead, can be calculated as Standard Fixed Overhead Rate X (Actual Hours – Standard Hours)

**Three-Way Variance Analysis**

In this method, the Budget Variance is split up into

**Spending Variance**– It is the difference between an actual overhead value and a flexible budget value.**Efficiency Variance**– It is the difference between the actual variable overhead based on the time taken to manufacture a number of items. It is also for a standard variable overhead computed for a budgeted time rather than any other requirement.

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**Four-Way Variance Analysis**

This method simply breaks up the spending variance into fixed and variable parts, with the remaining two variances similar to the Three-Way Variance Analysis. So, all other points might be similar, but when these are used practically, you just need to consider everything in a proper way to understand everything.

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