True or False: Variance analysis does not help in determining if corrective actions are needed for future costs.

Variance analysis is a crucial tool used in financial planning and management to assess the differences between expected and actual performance in financial terms. It involves calculating the difference between budgeted costs and actual costs, helping organizations understand where they are over or under budget. The primary purpose of variance analysis is to identify discrepancies that may indicate mismanagement or inefficiencies.

When a significant variance is detected, it prompts investigation into the reasons behind those differences. This can lead to informed decisions regarding corrective actions that may be necessary to address over-expenditures or under-performance in future financial planning. By analyzing variances, organizations can refine their budgeting processes, forecast more accurately, and implement more effective financial controls.

Thus, the assertion that variance analysis does not assist in determining if corrective actions are needed for future costs is false. It is an integral part of performance management, guiding decision-makers in developing strategies to improve future financial outcomes.