How to report a variance
A variance report sets actual results against the flexed budget. It says which differences matter, why they arose and who should act.
Task 1The variance report3 questions
A variance report compares the actual results with the flexed budget. Each variance is marked F for favourable or A for adverse.
| Line | Flexed budget | Actual | Variance |
|---|---|---|---|
| Sales revenue | 34,500.00 | 33,120.00 | ? |
| Materials | 8,050.00 | 8,533.00 | ? |
| Labour | 4,600.00 | 4,508.00 | 92.00 F |
| Variable overheads | 1,150.00 | 1,150.00 | Nil |
| Fixed overheads | 13,500.00 | 13,905.00 | 405.00 A |
Income below budget and costs above budget are adverse. Income above budget and costs below budget are favourable.
Task 2Which variances to report4 questions
Task 3Say why, and to whom3 questions