Criteria for determining which variances should be investigated and corrected.

variances that are large in amount

Materiality

Variances that are incurred on a regular basis. May be due to a standard  being out of date and needs to be brought to more current levels. 

Constantly occuring

Some costs cannot be controlled despite efforts by management, so these variances are not followed up, For examples: power costs. 

Controllability

Will be more inclined to investigate variances to items that are critical to the success of the firm.

Nature of the item