ECONOMICS

Detailed explanation-1: -The difference between actual costs incurred and the flexible budget amount for that same level of operations is called a budget variance. Budget variances can indicate a department’s or company’s degree of efficiency, since they emerge from a comparison of what was with what should have been.

Detailed explanation-2: -In short, your budget represents the numbers your startup expects to hit, while actuals are the numbers you’ve achieved in reality. When combined with your financial forecast, this is what each represents: Budget: What your startup expects to achieve. Actuals: What your startup actually achieved.

Detailed explanation-3: -A difference between standard costs used for cost control and the budgeted costs representing the same manufacturing effort can exist because standard costs represent what costs should be while budgeted costs represents expected actual costs.

Detailed explanation-4: -Actuals are defined as the – the actual expenses and actual income generated throughout the year that contribute to actual revenue and cash flow. The difference between the actuals and your budget reflects your budget variance. A favorable variance shows positive numbers for your key performance indicators.