Budget variance is defined as which of the following?

• A. The total revenue for the budgeting period.
• B. The remaining cash after paying bills.
• C. The difference between the amount budgeted and the actual amount spent or received.
• D. The rate of inflation affecting the budget.

Answer: (C)

Budget variance is the difference between what you planned to spend or receive and what actually happened. It shows how far actual results deviate from your budget, highlighting where you stuck to the plan or where you need to adjust.

For example, if you budget $2,000 for groceries but spend $2,300, the variance is $300 over budget (unfavorable). If you budget $500 for dining out and only spend $350, the variance is $150 under budget (favorable). In personal finance terms, favorable means you did better than planned (spending less or earning more), while unfavorable means you spent more or earned less than planned.

The other options aren’t variances themselves: total revenue is simply the amount earned, not the difference from budget; remaining cash after bills is your ending cash balance, not how far you were from your budget; and inflation is a factor that can affect budgets but isn’t the variance itself.