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
AB = A - F
  • Where B% is the budget percentage variance
  • AB is the absolute variance
  • A is the actual budget cost or actual outcome
  • F was the forecasted budget

To calculate budget variance, simply subtract the forecasted budget from the actual 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 calculate 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%