What is budget variance and how can I understand it better?

What is budget variance and how can I understand it better?

Budget variance refers to the difference between the budgeted amount and the actual amount spent. It helps in assessing financial performance.

Why is it important to analyze budget variance?

Analyzing budget variance is crucial as it helps identify areas of overspending or underspending, allowing for better financial control.

Can you explain the different types of budget variances?

Sure! 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 improve my budget management based on variance analysis?

You can improve budget management by regularly reviewing variances, adjusting forecasts, and implementing cost control measures.