Under standard costing, the work order was expected to cost the standard. It actually cost something else. The difference is variance — and its composition tells you what happened.
The variance types. Material usage — we used more or less material than the structure said. Material price — material cost more or less than standard. Resource efficiency — the job took more or fewer hours than the work definition said. Resource rate — labour or machine cost more per hour than standard. Overhead absorption — we absorbed more or less overhead than we incurred.
What each is telling the business. Usage variance means scrap, yield, or a wrong BOM. Efficiency variance means a process problem, a training problem, or a wrong routing. Price variance means purchasing, or a stale standard.
The uncomfortable truth: a large persistent variance usually means the standard is wrong, not that the plant is failing. Before telling the plant manager they are twelve per cent inefficient, check the work definition. That single piece of advice will save you a difficult meeting at least once.
Then: open a completed work order's cost, compare actual against standard, identify each variance type, drill to the transactions causing the largest one, and deliberately produce a usage variance by over-issuing material and show it appear.
Variance analysis is the reason standard costing exists. If nobody looks at these numbers, the client should probably be on a different method — the cost method decision, arriving as a verdict.
The drill from variance to the transaction that caused it is the analysis skill, and it is what the lab marks.