Budget vs. Actual
Definition
A report that compares what you planned to earn and spend with what actually happened, line by line, so you can see where results drifted from the plan.
Want a deeper explanation?
Formula
Variance = Actual − Budget (and Variance % = Variance ÷ Budget)A budget is only useful if you compare against it. A monthly budget-vs-actual review is one of the simplest habits that separates owners who steer the business from owners who react to it.
Focus on the few lines with the biggest dollar variance, not every line. Watch for: a budget so outdated that every line is "off," which means it is time for a rolling forecast instead.
Example
You budgeted $18,000 for ads in March and spent $24,500, a $6,500 (36%) overspend, while revenue came in only 5% above budget.