1. What Is Variance Percentage?

Variance percentage is a financial metric that measures the difference between actual and budgeted amounts as a percentage of the budget. It helps organizations understand performance deviations and identify areas needing attention.

2. How Does The Calculator Work?

The calculator uses the variance percentage formula:

Where:

• \( \text{Variance} \) — Difference between actual and budgeted amounts (currency)
• \( \text{Budget} \) — Planned or budgeted amount (currency)

Explanation: The formula calculates what percentage the variance represents of the total budget, providing a standardized measure of deviation.

3. Importance Of Variance Analysis

Details: Variance analysis is crucial for financial planning, budget control, and performance measurement. It helps identify overspending, revenue shortfalls, and operational inefficiencies.

4. Using The Calculator

Tips: Enter variance and budget amounts in the same currency units. The budget amount must be non-zero for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What does a positive variance percentage indicate?
A: A positive variance typically indicates favorable performance (e.g., higher revenue or lower costs than budgeted).

Q2: What does a negative variance percentage indicate?
A: A negative variance typically indicates unfavorable performance (e.g., lower revenue or higher costs than budgeted).

Q3: How is variance different from variance percentage?
A: Variance is the absolute difference, while variance percentage shows the relative difference as a proportion of the budget.

Q4: What is considered a significant variance percentage?
A: Significance depends on context, but typically variances beyond ±5-10% warrant investigation in most organizations.

Q5: Can variance percentage be over 100%?
A: Yes, if the variance exceeds the budget amount, the percentage can be greater than 100%.