Using Budgets

Question 1

What is variance?

Answer 1

The difference between a budgeted figure and the actual achieved figure.

Question 2

What is variance analysis?

Answer 2

Is the comparison by an organisation of its actual performance with its expected budgeted performance over a certain time period.

Question 3

What is a favorable Variance?

Answer 3

This is a change from a budgeted figure that leads to a higher than expected profit.

Question 4

What is a adverse variance?

Answer 4

This is a change from a budgeted figure that leads to a lower than expected profit.