The websites are confusing! Can someone please explain what a revenue variance is? I want to do my homework for a spreadsheet I downloaded.
I just need the definition, please.
The meaning of variance, and the method of computing it, is described here:
http://davidmlane.com/hyperstat/A16252.html
Apply that method to a set of revenue numbers that you should have been provided in the spreadsheet.
Thank you!
Of course! I'd be happy to explain what revenue variance is.
Revenue variance, also known as sales variance or sales revenue variance, is a metric used to measure the difference between actual revenue and the expected or budgeted revenue. It provides insight into how well a company's actual sales performance aligns with its projected or planned sales.
To calculate revenue variance, you need two key figures: the actual revenue and the expected/budgeted revenue.
Here's the formula to calculate revenue variance:
Revenue Variance = Actual Revenue - Expected/Budgeted Revenue
If the revenue variance is positive, it means that the actual revenue exceeded the expected revenue, indicating better performance than anticipated. Conversely, if the variance is negative, it means the actual revenue fell short of the expected revenue, signaling underperformance.
In your homework, to calculate revenue variance, you should have access to the actual revenue figures for a particular period and the corresponding budgeted or expected revenue for that same period. Subtracting the expected revenue from the actual revenue will give you the revenue variance.
Remember to label your calculations and units clearly, and ensure that the data you're working with is accurate and reliable. This will help you complete your spreadsheet accurately and effectively.
If you have further questions or need assistance with any specific steps in your assignment, feel free to ask!