Peregrine Global Services Accounting Practice Exam

The choice of cost-benefit analysis as the evaluation technique following variance analysis is insightful because it provides a structured framework for assessing the financial implications of variances. Variance analysis involves comparing actual financial performance to budgeted performance to identify discrepancies. Upon identifying these variances, cost-benefit analysis allows for a thorough examination of the potential advantages and disadvantages associated with each variance.

By quantifying costs and the expected benefits resulting from decisions taken to address variances, organizations can better prioritize their actions. This method enables management to make informed decisions on whether to pursue certain operational strategies or corrective actions that arose from the variance analysis. It assesses not just the financial impact of each variance but also helps in allocating resources effectively to maximize returns and address inefficiencies.

In contrast, while market research analysis may provide insights into external factors affecting performance, and performance review analysis could help understand employee contributions, these methods do not specifically align with the financial implications of variances. Qualitative risk assessment focuses more on identifying and analyzing potential risks rather than evaluating costs versus benefits in the context of identified variances. Thus, cost-benefit analysis stands out as the most applicable technique following variance analysis for financial decision making.