Variance is a difference between actual

and budget figures

Variances can be either:
Positive/favourable
or
Adverse/unfavourable

 Favourable

variance
Costs were lower

Adverse

variance
Costs were higher

than expected in the

than expected
budget
Revenue/profits
Revenue/profits
were lower than
were higher than
expected
expected

It is the cause and significance

of a variance that matters not

whether it is favourable or
adverse.

Item

Budget

Actual

Variance

Favourable

'000

'000

'000

or Adverse

Standard product

75

90

15

Premium product

30

25

-5

Total sales revenue

105

115

10

Wages

35

38

Rent

15

17

Marketing

20

14

-6

Other overheads

27

35

Total costs

97

104

Profit

11

SALES REVENUE

COSTS