budget variance

If there is a difference between planned and actual figures, the difference is called a variance

A XYZ company's operating budget, for instance, may forecast spending for employee training. The annual training spending figure may be set first, for management and control purposes, but this can be broken down later into monthly or quarterly figures. Two quarters into an annual budget cycle, figures for budget item "Employee Training" might look something like below

A variance for each quarter is found by subtracting planned spending from actual spending. The variance is usually presented both in currency units and as a percentage of the planned figure. Here, a positive variance means that spending is over budget and a negative variance means that spending is under budget.

Large number of organizations plan spending and revenue management with a budget hierarchy. That means that planning begins with high level budgets, such as the company wide, capital and operating budgets. In these high level plans, spending items and revenues usually correspond closely to the revenue and expense items in the organization's Chart of accounts (COA). Lower level plans may further divide higher level categories, or even represent single, specific revenue or spending items.