Define: Variance

UK Accounting Glossary

Definition: Variance

Quick Summary of Variance

The difference between a planned, budgeted or standard cost and the actual cost incurred. An adverse variance arises when the actual cost is greater than the standard cost. A favourable variance arises when the actual cost is less than the standard cost.

What is the dictionary definition of Variance?

Dictionary Definition

In standard costing and budgetary control, variance is the difference between the standard or budgeted levels of cost (or income) of an activity and the actual costs incurred (or income achieved). If actual performance is better than standard then a favourable variable occurs, whilst conversely if actual performance is worse, then there is adverse variance.

Adverse variances are usually subject to detailed analysis in order to pinpoint it’s exact cause(s).

Full Definition of Variance

Variance FAQ's

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Variance. Payroll & Accounting Heaven Ltd. July 21, 2019
Chicago Manual of Style (CMS):
Variance. Payroll & Accounting Heaven Ltd. (accessed: July 21, 2019).
American Psychological Association (APA):
Variance. Retrieved July 21, 2019, from website:

Definition Sources

Definitions for Variance are sourced/syndicated from:

  • Oxford Dictionary Of Economics
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd December 2018.