Variance Percentage Calculator

Variance Percentage Formula:

\[ \text{Variance Percentage} = \left( \frac{\text{Actual} - \text{Planned}}{\text{Planned}} \right) \times 100 \]

Variance Percentage:

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1. What is Variance Percentage?

Variance Percentage is a financial metric that measures the difference between actual and planned values as a percentage of the planned value. It helps in analyzing performance deviations in budgeting, forecasting, and project management.

2. How Does the Calculator Work?

The calculator uses the Variance Percentage formula:

\[ \text{Variance Percentage} = \left( \frac{\text{Actual} - \text{Planned}}{\text{Planned}} \right) \times 100 \]

Where:

\( \text{Actual} \) — The actual measured or achieved value
\( \text{Planned} \) — The expected or budgeted value

Explanation: The formula calculates the relative difference between actual and planned values, expressed as a percentage. Positive values indicate over-performance, while negative values indicate under-performance.

3. Importance of Variance Calculation

Details: Variance analysis is crucial for performance measurement, budget control, identifying areas for improvement, and making informed business decisions. It helps organizations track progress against targets and adjust strategies accordingly.

4. Using the Calculator

Tips: Enter both actual and planned values. The planned value cannot be zero. Results are shown as percentages with two decimal places.

5. Frequently Asked Questions (FAQ)

Q1: What does a positive variance percentage indicate?
A: A positive variance percentage indicates that the actual value exceeds the planned value (favorable variance).

Q2: What does a negative variance percentage indicate?
A: A negative variance percentage indicates that the actual value is less than the planned value (unfavorable variance).

Q3: Can the planned value be zero?
A: No, the planned value cannot be zero as it would result in division by zero, which is mathematically undefined.

Q4: In which fields is variance percentage commonly used?
A: Variance percentage is widely used in finance, accounting, project management, manufacturing, and quality control.

Q5: How should I interpret a variance percentage of 0%?
A: A variance percentage of 0% indicates that the actual value exactly matches the planned value, showing perfect performance against the target.