ExampleIf you have spent 120% of budget then you have a 20% budget variance. It is also possible for a budget variance to be an underspend such as a project that comes in at 50% of budget. Although this is favorable, it is viewed as a planning error that unnecessarily committed funds to a project that weren't needed. As such, it is common for the effectiveness of financial planning and control to be evaluated by variance whether positive or negative.
|Overview: Budget Variance|
The difference between budgeted amount and actual spend often expressed as a percentage of budget.
Evaluating financial planning and controls.