In budgeting, a variance is the difference between a budgeted, planned, or standard cost and the actual amount incurred/sold. Variances can be computed for both costs and revenues.
What is the purpose of variance reporting?
A variance report is a document that compares planned financial outcomes with the actual financial outcome. In other words: a variance report compares what was supposed to happen with what happened. Usually, variance reports are used to analyze the difference between budgets and actual performance.
How do you write a variance report?
8 Steps to Creating an Efficient Variance Report
- Step 1: Remove background colors of your variance report. ...
- Step 2: Remove the borders. ...
- Step 3: Align values properly. ...
- Step 4: Prepare the formatting. ...
- Step 5: Insert absolute variance charts. ...
- Step 6: Insert relative variance charts. ...
- Step 7: Write the key message.
