A company wishes to evaluate its performance against planned budgets. What is a useful tool for this evaluation?

Variance analysis is a critical tool for evaluating a company's performance against its planned budgets. It involves comparing the budgeted performance to the actual performance to identify differences, or variances, between the two. By analyzing these variances, a company can determine not just the areas where it has performed well or poorly, but also the underlying reasons for these discrepancies.

This method allows management to gain insights into various aspects such as cost control, revenue generation, and overall operational efficiency. For example, if a company finds that its actual costs are significantly higher than budgeted, variance analysis can help break down the costs and pinpoint specific areas like material, labor, or overhead that may need attention. Similarly, it can also highlight areas of positive performance where actual revenue exceeded budget expectations.

In contrast, other options like cost-volume-profit analysis, standard cost determination, and break-even analysis serve different purposes. Cost-volume-profit analysis helps understand how changes in costs and volume affect a company's operating income and net income, rather than focusing specifically on budget performance. Standard cost determination sets benchmarks for expected costs but does not inherently compare actual costs against those standards. Break-even analysis identifies the sales volume at which the company neither makes a profit nor incurs a loss, which again is more focused on sales