What is the formula for calculating a revenue variance?

The formula for calculating a revenue variance is typically expressed as Actual minus Budget. This calculation helps organizations determine the difference between what was actually earned in revenue versus what was expected or budgeted.

Identifying the revenue variance allows financial managers to assess performance and understand the impact of deviations from financial plans. By calculating the variance in this manner, organizations can pinpoint whether they are performing better or worse than anticipated.

Using Actual minus Budget provides a straightforward understanding of performance: if the result is positive, it indicates that actual revenues exceeded expectations; if negative, it means the organization fell short. This approach is essential in financial analysis, aiding stakeholders in making informed decisions regarding operational adjustments, strategic planning, and financial forecasting.