What is budget variance and how is it calculated?

What is budget variance and how is it calculated?

Budget variance refers to the difference between the budgeted amount and the actual amount spent. It can be calculated by subtracting the actual expenses from the budgeted expenses.

Can you give me an example of a budget variance?

Sure! If your budget for marketing was $10,000 but you spent $12,000, the budget variance would be -$2,000, indicating an overspend.

What are the types of budget variances?

There are two main types: favorable variance, where actual spending is less than budgeted, and unfavorable variance, where spending exceeds the budget.

How can I analyze budget variances effectively?

To analyze budget variances, compare actual results to budgeted figures, identify the reasons for variances, and adjust future budgets accordingly.