What is a revenue variance and what does it mean?

Expert Solution

Revenue variance represents the difference between variance of Actual sales and budgeted sales,

If Actual is greater than budgeted sales means Favorable revenue variance . If budgeted is higher than actual it means unfavorable or adverse variance.

The difference or variance come in existence in Actual sales and budgeted Sales due to three reasons are shown below:

1. Sales volume variance : sales volume variance represents the no. Of units sold in Actual and budgeted units sold multiply by budgeted price

2. Sales price variance : it represents the difference of actual selling price and budgeted selling price multiply by Actual units sold .

3. Sale mix variance : it represents the difference between actual and budgeted unit sold multiply by the contribution margin

ekkarill92 answered 2 years ago

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