Enter the actual spending and the budgeted spending into the calculator to determine the spending variance. The spending variance is a measure of the difference between what was actually spent and what was budgeted.
Spending Variance Formula
The following formula is used to calculate the spending variance.
SV = AS - BS
Variables:
- SV is the spending variance ($)
- AS is the actual spending ($)
- BS is the budgeted spending ($)
To calculate the spending variance, subtract the budgeted spending from the actual spending.
What is Spending Variance?
Spending variance is a financial metric used to assess the difference between budgeted and actual expenditure. It is a crucial tool for financial analysis, budgeting, and cost control. A positive variance indicates that spending was less than budgeted, which is generally favorable. Conversely, a negative variance suggests that spending exceeded the budget, which may require investigation and corrective measures.
How to Calculate Spending Variance?
The following steps outline how to calculate the Spending Variance.
- First, determine the actual spending (AS).
- Next, determine the budgeted spending (BS).
- Use the formula SV = AS – BS to find the spending variance.
- Finally, calculate the Spending Variance (SV).
- After inserting the variables 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 spending (AS) = $5,000
budgeted spending (BS) = $4,500
