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

  1. The act of varying or the state of being variable
  2. A difference between what is expected and what happens
  3. The state of differing or being in conflict


Full Definition of Variance

In standard costing and budgetary control, the 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 its exact cause(s).


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. November 22, 2019
Chicago Manual of Style (CMS):
Variance. Payroll & Accounting Heaven Ltd. (accessed: November 22, 2019).
American Psychological Association (APA):
Variance. Retrieved November 22, 2019, from website:

Definition Sources

Definitions for Variance are sourced/syndicated from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

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