Variance Analysis in SQL Reporting

Context

Variance analysis is a common analytics task in finance, operations, and product reporting. Interviewers ask this to see whether you can turn a business question like “why did performance change?” into a structured SQL workflow.

Core question

Explain how you would approach variance analysis using SQL. Your answer should cover:

1. how you define the baseline for comparison (budget, prior month, prior year, forecast, or target),
2. how you calculate absolute and percentage variance,
3. how you break variance down by dimensions such as product, region, or month, and
4. what SQL features or supporting tools you would use to make the analysis reliable and repeatable.

Scope guidance

The interviewer is not looking for a single query only. They want a practical explanation of the analysis process, the SQL patterns you would use, common pitfalls such as nulls or divide-by-zero, and how you would communicate findings from the output.