Glossary

Activity Variance - The diffrence between a revenue or cost item in the static planning in the static planning budget and the same item in the flexible budget. An activity variance is due soley to the difference between the level of activity assumed in planning budget and the actual level of activity used in flexable budgets.

Flexible budget - A report showing estimates of what revenues and costs should have been, given the actual level of activity.

Planning budget - Abudget at the beginning of the budgeting period that is valid only for the planned level of activity.

Revenue Variance - The differnce how much the revenue should have been the actual level of activity, and the activity revenue for the period. A favorable revenue variance occurs because the revenue is higher than expected, given the actual level of activity for the period.

Spending Varince - The difference between how much a cost should have been, given the actual level of activity, and the actual amount of cost. A favorable spending variance occurs because the cost is lower the expected, given the actual level of activity for a period.