Enter the actual value and the forecasted value into the calculator to determine the forecast variance.
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Forecast Variance Formula
The following formula is used to calculate the forecast variance for a given actual value and forecasted value.
V = A - F
Variables:
- V is the forecast variance
- A is the actual value
- F is the forecasted value
To calculate the forecast variance, subtract the forecasted value from the actual value. This will give you the difference between what was predicted and what actually occurred.
What is Forecast Variance?
Forecast variance is a measure used to assess the accuracy of a forecast by comparing the forecasted values to the actual values. It represents the difference between what was predicted and what actually occurred. A positive variance indicates that the actual value was higher than the forecasted value, while a negative variance indicates that the actual value was lower than the forecasted value. Forecast variance is commonly used in various fields such as finance, supply chain management, and project management to evaluate the performance of forecasting models and make necessary adjustments for future predictions.
How to Calculate Forecast Variance?
The following steps outline how to calculate the Forecast Variance.
- First, determine the actual value (A).
- Next, determine the forecasted value (F).
- Next, calculate the forecast variance using the formula V = A – F.
- Finally, calculate the Forecast Variance.
- After inserting the values and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Actual Value (A) = 150
Forecasted Value (F) = 130