A variance report typically compares actual performance to a forecast or budgeted amount. It is a tool used in financial management and analysis to understand the differences (variances) between what was expected and what actually occurred. The purpose of this report is to highlight discrepancies, allowing organizations to take corrective actions if needed.
In this context, the forecast index represents the anticipated or planned performance against which actual results are measured. An effective variance analysis can provide insights into operational efficiency, financial performance, and strategic planning, ultimately contributing to informed decision-making.
Other options do not align as well with the primary function of a variance report. For instance, current assets and net profit reflect static financial positions rather than the comparison of planned versus actual figures. Past performance, although it can inform future forecasts, isn’t the main focus of a variance report, which is primarily about assessing deviations from expectations set forth in forecasts or budgets.