11/27/2023 0 Comments What does high cost variance mean![]() ![]() Businesses often track the variance in different types of costs, such as direct material or labor costs and overhead. You may also calculate variance for a specific expense category (for example, the variance between your expected and actual food and transportation costs. ![]() If you spend less than you budgeted for, the difference is said to be a favorable variance if you spent more than you budgeted for, you have an unfavorable variance. Expense or cost variance: This represents the difference between actual and budgeted expenditures. In a budget, you may choose to further break down income into categories (salary and freelance income, for example) and assess the variance at the income category level. If it's less than the expected figure, you have an unfavorable variance in income. If the actual figure is higher than you expected, the variance is said to be favorable. Income variance: This is the difference between actual and expected income.
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