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Accounting & Tax vocabulary · Costs & Budgeting

Variance

Meaning in accounting & tax, with examples

/ˈveriəns/nounCommon term

In accounting & tax, variance means: The difference between a planned or budgeted amount and the actual result. It is favourable if the result is better than planned and adverse if it is worse.

In Turkish: sapma, fark, bütçe sapması

How it is used

Management accountants run variance analysis every month and explain significant variances to managers. British English says favourable and adverse; American English often says favorable and unfavorable.

Example sentences

  1. There's an adverse variance of 12 percent on raw materials this month.

  2. Can you explain the variance between budget and actual for marketing?

Common collocations

  • variance analysis
  • budget variance
  • adverse variance
  • favourable variance
  • explain a variance
  • budgetA financial plan that sets out expected income and spending for a future period, usually a year, and is used to control costs and compare actual results.
  • forecastAn updated estimate of future results, such as sales, costs or cash, based on actual figures so far and current expectations.
  • cost centerA department or unit, such as HR, IT or a production line, to which costs are assigned so that managers can track and control spending.
  • management accountingThe branch of accounting that prepares internal information, such as budgets, cost analysis and performance reports, to help managers make decisions.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Costs & Budgeting

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This page explains English vocabulary for learners. It is not financial advice.