Accounting & Finance
What is Budget Variance?
- Budget Variance
- Budget Variance is the difference between budgeted and actual income or expenditure for a period, used to identify over-spending or under-performance against the plan.
Favourable vs Adverse Variance
For revenue: actual > budget = Favourable. For expenses: actual < budget = Favourable. Adverse revenue variance (sales below target) and adverse expense variance (overspending) both reduce profit vs plan. Large variances trigger investigation and corrective action.
Budget Variance Report in ERPNext
The Budget Variance Report (Accounting → Reports) compares posted actuals against configured budgets by Cost Centre or Project, period by period. Filter by cost centre to pinpoint which department is over budget. Management uses this report in monthly performance reviews.
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