🚩 Adverse Variance: Rolling with the Punches in Accounting!
What in the Accounting World is Adverse Variance?
So, you’ve stumbled across the term “Adverse Variance” and thought, ‘Oh great, another piece of jargon to add to my growing list of accounting confusions.’ Well, worry not! We’re here to simplify it for you and add a touch of humor along the way (who says accountants can’t be fun?).
Adverse Variance, also known as Unfavourable Variance, is when the actual performance of a company falls short of its budgeted performance. In more relatable terms, it’s like discovering that your carefully planned-out weekly grocery budget was annihilated by your sudden craving for premium ice cream. Essentially, if your actual sales revenue is less than what you hoped for, or your actual costs are more than anticipated, you’ve got yourself an adverse variance.
The Numbers Don’t Lie! 🤓
To better understand, let’s break it down with a diagram:
pie title Variance Breakdown
a
