Budget Variance Analysis Calculator (Budget vs Actual)
Compares budgeted and actual revenue and costs to calculate revenue, cost and profit variances in amount and percent, plus sales price and volume variances when units are entered.
Things to keep in mind:
- The price/volume split is meaningful for single-product businesses or average prices; multi-product businesses should also examine the sales mix variance.
- Flexible budgets (cost budgets adjusted to actual volume) are not modelled.
- Enter budget and actual figures on the same basis (excluding VAT, accrual or cash).
- This tool is for information only and does not replace management reporting or an audit opinion.
Calculator
Result
Enter the values and press Calculate to see the result here.
About this tool
Budget variance analysis compares the actual figures at the end of a period with the budget and breaks down the reasons for the difference. Seeing how far each line deviated from target improves the next budget and cost decisions.
Formulas
- Revenue variance = Actual revenue − Budget revenue (positive = favourable)
- Cost variance = Budget cost − Actual cost (positive = favourable, a saving)
- Profit variance = Actual profit − Budget profit
- Variance percent = Variance / Budget amount × 100 (the absolute budget profit is used for the profit variance)
- Sales price variance = (Actual unit price − Budget unit price) × Actual quantity
- Sales volume variance = (Actual quantity − Budget quantity) × Budget unit price
The price and volume variances add up to the revenue variance.
Example: revenue of 10,000 units × 100 TRY = 1,000,000 TRY was budgeted; 8,000 units were sold at 115 TRY, giving 920,000 TRY. The revenue variance is −80,000 TRY: the price increase had a favourable effect of +120,000 TRY and the lower volume an adverse effect of −200,000 TRY. With costs of 730,000 TRY against a budget of 700,000 TRY, profit fell from 300,000 TRY to 190,000 TRY (−36.67%).
Results for the example: revenue variance −80,000.00 TRY (−8.00%), cost variance −30,000.00 TRY (cost is 4.29% over budget), profit variance −110,000.00 TRY (−36.67%), budget profit margin 30.00%, actual profit margin 20.65%.
How to read the result: The sign of the revenue, cost and profit variances shows whether they are favourable or adverse: for revenue and profit variance a positive value is favourable, and for the cost variance amount a positive value is a saving. The cost change (%) reads the other way: a positive value means a budget overrun. The profit variance is the combined effect of the revenue and cost variances; in the example the revenue shortfall and the cost overrun together eroded profit. The change in profit margin shows how the ratio of profit to revenue moved against the budget. The price and volume variances let you tell whether the revenue gap comes from pricing or from sales volume; together they equal the revenue variance. The cause of a variance (seasonality, exchange rates, supplier prices and so on) cannot be inferred from this tool and needs separate review.
How to use
- Enter budgeted and actual revenue for the period.
- Enter budgeted and actual total cost (or the expense line you want to examine).
- For the price/volume split, enter budgeted and actual quantities sold (optional).
- Press Calculate.
Notes
Amounts are rounded to the cent and percentages to 2 decimals (HALF_UP). For revenue and profit variances a positive value is favourable; for the cost variance amount a positive value is a saving (favourable), while a positive cost variance percent is an overspend. If budget profit is zero, the profit variance percent shows 0. Without quantities the price and volume variances show 0.
Sources
Frequently asked questions
Subtract the budget amount from the actual amount and divide by the budget to express it as a percentage. For revenue and profit, actual above budget is favourable; for costs, staying below budget is favourable.
A favourable variance increases profit compared with the budget (more revenue or less cost); an adverse variance reduces it.
It shows whether the revenue gap comes from pricing or from the quantity sold, and whether a price rise made up for lost volume.
It depends on the business; many companies flag variances above 5–10% as requiring an explanation.
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