Question

Foster Gardening manufactures and sells garden supplies. Last month, Foster had a controllable margin of $1.6 million, which was lower than the budgeted $1.8 million. If average operating assets were valued at $7 million, what was the difference in ROI between the budgeted and actual amounts

Answer 1

budget variance was the difference in ROI between the budgeted and actual amounts

What is budget variance?

A budget variance is an accounting term that refers to situations in which actual costs are higher or lower than the standard or projected costs. An unfavorable, or negative, budget variance indicates a budget shortfall, which can occur when revenues fall short or costs exceed expectations.

Typically, variance reports are used to examine the gap between budgeted and actual performance. Depending on the financial outcomes being compared, the variance report may also be referred to as "budget variance" or simply "variance." The difference between the budgeted/baseline goal and the actual reality is referred to as "variance."

Budget variance equals the difference between the budgeted amount of expense or revenue, and the actual cost.

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