Revenue
Enter budgeted and actual revenue amounts
Expenses
Add expense categories with budget and actual amounts
Analysis Settings
Flag variances exceeding this percentage
Overall Performance
Total Budget
$950,000
Total Actual
$932,000
Total Variance
-$18,000
-1.9%
Variance Summary
Total Favorable
$10,000
Total Unfavorable
$42,000
Top Variances
Largest deviations by percentage (threshold: 5%)
| Category | Variance | % |
|---|---|---|
| Sales & Marketing | +$15,000 | +15.0% |
| Research & Development | -$5,000 | -6.3% |
| Total Revenue | -$25,000 | -5.0% |
| General & Administrative | +$2,000 | +2.9% |
| Cost of Goods Sold | -$5,000 | -2.5% |
Recommendations
Action Required
Medium PrioritySales & Marketing is 15.0% over budget. Investigate root causes and implement cost controls.
How Variance Analysis Works
Variance Calculation
Calculates the difference between actual and budgeted amounts, expressed in both dollars and percentages.
Variance ($) = Actual - Budget
Variance (%) = (Variance $ / Budget) × 100
Positive variance = Actual > Budget
Negative variance = Actual < BudgetFavorable vs. Unfavorable
Determines whether each variance helps or hurts financial performance based on account type.
Revenue Accounts:
• Favorable: Actual > Budget (positive variance)
• Unfavorable: Actual < Budget (negative variance)
Expense Accounts:
• Favorable: Actual < Budget (negative variance)
• Unfavorable: Actual > Budget (positive variance)Significance Threshold
Flags variances that exceed a specified percentage threshold to focus attention on material items.
Significant Variance = |Variance %| > Threshold %
Typical thresholds:
• 5-10%: Standard monitoring
• 10-15%: Management attention
• >15%: Immediate investigationCumulative Impact Analysis
Aggregates all variances to calculate net favorable/unfavorable impact and overall performance vs. budget.
Total Favorable = Sum of all favorable variances
Total Unfavorable = Sum of all unfavorable variances
Net Variance = Total Favorable - Total Unfavorable
Overall Status = Favorable if Net Variance > 0Frequently Asked Questions
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