Calculating the average variance between budgeted and actual expenses is essential for effective financial management. This article will guide you through a simple method to calculate the average variance using an embedded Excel sheet.
Calculate the Average Variance Between Budgeted and Actual Expenses
To find the average variance, follow these steps:
- Input the budgeted and actual expenses.
- Use the embedded Excel sheet to calculate the variance automatically.
Example
Here’s an example table with budgeted and actual expenses for each day of the month:
| Day | Budgeted Expense ($) | Actual Expense ($) |
|---|---|---|
| 1 | 200 | 220 |
| 2 | 250 | 240 |
| 3 | 180 | 200 |
| 4 | 300 | 310 |
| 5 | 220 | 210 |
| 6 | 260 | 270 |
| 7 | 240 | 230 |
| 8 | 210 | 220 |
| 9 | 280 | 290 |
| 10 | 230 | 240 |
| 11 | 200 | 210 |
| 12 | 250 | 260 |
| 13 | 180 | 190 |
| 14 | 300 | 310 |
| 15 | 220 | 230 |
| 16 | 260 | 270 |
| 17 | 240 | 250 |
| 18 | 210 | 220 |
| 19 | 280 | 290 |
| 20 | 230 | 240 |
| 21 | 200 | 210 |
| 22 | 250 | 260 |
| 23 | 180 | 190 |
| 24 | 300 | 310 |
| 25 | 220 | 230 |
| 26 | 260 | 270 |
| 27 | 240 | 250 |
| 28 | 210 | 220 |
| 29 | 280 | 290 |
| 30 | 230 | 240 |
| 31 | 200 | 210 |
Exercise
Use the built-in AVERAGE function to calculate the variance and then the average variance.
Solution
After filling in the expenses, the embedded Excel sheet will automatically calculate the variance for each day and the average variance. Here’s what happened:
- Each day's budgeted and actual expenses were entered into the corresponding cells.
- The variance was calculated by subtracting the budgeted expense from the actual expense.
- The average variance function in Excel summed these variances and divided by the number of days to provide the average variance.
By using this method, you can easily track and calculate the average variance between budgeted and actual expenses for any month.