Variance (σ²) measures average squared dispersion. Ungrouped formula: σ² = Σ(x - x̄)² / n. Grouped formula: σ² = Σf(x - x̄)² / Σf where x is class midpoint, f is frequency. Shortcut method: σ² = [Σfx²/Σf] - x̄². Key concepts: variance always non-negative, units are squared. Common traps: confusing population and sample variance (divide by n vs n-1). Exam tips: use shortcut formula for efficiency, verify mean calculation first. Time-saving: organize calculations in table format. Computational steps: calculate mean, find deviations, square them, weight by frequency, sum and divide. Applications: quality control variance, investment risk. Interpretation: larger variance indicates greater variability. Relationship: Standard Deviation = √Variance. Properties: Var(aX) = a² Var(X), Var(X + k) = Var(X). Practice with business datasets.