Question

A revenue variance is the:

a. difference between what a cost should have been at the actual level of activity and the actual amount of the cost actual total revenue
b. earned difference between what revenue should have been at the actual level of activity and the actual revenue
c. difference between total revenue in the planning budget and actual total revenue

Answer 1

Answer: Option C

Explanation: In simple words, revenue variance refers to the difference between the revenue one expects to earn as per the budget made for a specified period of time and the revenue it actually earned in that time.

Organisations calculate revenue variance to identify the reasons they are not performing well or the qualities they are performing more than expected.

This measure helps organisation in decision making as to whether they should make changes in their process, and if so then wheat changes, or should remain as they are.