Enter the forecasted budget and the actual eventual cost into the calculator to determine the budget variance. The calculator will display the absolute variance and the percentage variance.

## Budget Variance Formula

The following formulas are used to calculate a budget variance.

BV% = ( A-F/A )*100

BV = A – F

• Where B% is the budget percentage variance
• B is the absolute variance
• A is th actual bugdet cost or actual outcome
• F was the forecasted budget

## Budget Variance Definition

A budget variance is defined as either the percentage or absolute difference between a forecasted budget and the actual cost or budget that occurred.

Most often it makes sense to look at this in terms of a percentage. Then companies can analyze and compare the variance to other budgets.

## How to calcualte budget variance?

Example Problem #1

In this first problem, we have a new startup company that is designing a new website for their online store.

First, the original budget is laid out. For this example, the budget was determined to be \$50,000.00 for the creation of the online store.

Next, after the project is complete the actual cost is determined to be \$75,000.00.

Finally, using the formula for budget variance, the variance can be calculated as

B% = 75,000-50,000/50,000 *100

= 50% budget variance

Example Problem #2

In this next example, a construction team is working on a new home to be built. The original budget laid out is \$300,000.

After completion of the home and a few setbacks, the total cost comes out to \$400,000.

The absolute budget variance is calculated by subtracting the cost from the forecasted budget

BV = \$300,000 – \$400,000 = -\$100,000.00

The budget variance percentage can then be calculated as:

BV% = \$100,000 / \$300,000 * 100 = 33.3%