ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Budget vs. actuals is a comparison of two or more sets of data. It’s the variation (difference) between actual amounts and what was planned or budgeted. Variance analysis is the practice of analyzing the magnitude of these deviations and exploring why they happened.

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: -There are different types of budget variances, including revenue variance, expense variance, volume variance, sales mix variance, and price variance. Revenue variance occurs when budgeted verses actual revenue numbers differ. Expense variance occurs when there is a difference between budgeted and actual expenses.

Detailed explanation-4: -What does favorable and unfavorable mean in accounting? In the field of accounting, variance simply refers to the difference between budgeted and actual figures. Higher revenues and lower expenses are referred to as favorable variances. Lower revenues and higher expenses are referred to as unfavorable variances.