# Variance Analysis: [Organisation name] [Period, e.g. Q1 2027]

> Budget-versus-actual and forecast-versus-actual analysis for a
> period: summary and materiality thresholds, revenue variance split
> into price, volume, mix and FX, gross margin variance, operating
> expense by cost centre, headcount, capital expenditure and cash
> variances, root causes and one-off items, forecast implications and
> actions. Uses the standard management accounting decomposition of
> sales and margin variances (general arithmetic, written originally
> here). Replace every `[bracketed]` value and every row marked
> *Example*. This is a document format, not financial, investment, tax,
> legal or accounting advice.

<!--
Guidance: How to use this template
- Purpose: explain why actual results differ from the plan, separate
  what management controls from what it does not, and decide what to
  do. Numbers without a cause and an action are a reconciliation, not
  an analysis.
- Compare against one fixed base per column: the approved budget (the
  target) and the latest forecast (the expectation). Say which.
- Apply the materiality thresholds in section 1 so commentary goes to
  the lines that matter.
- Sign convention in this template: favourable variances are positive,
  adverse variances are shown in parentheses, for both income and cost.
  Amounts are EUR thousand at budget FX rates unless stated.
- The worked example uses the fictional Corvid Commerce Group, Q1 2027,
  against the FY2027 budget in Annual Budget (`finance/annual-budget`).
  The forecast effects feed Rolling Forecast (`finance/rolling-forecast`).
- Related documents: Monthly Management Report
  (`finance/monthly-management-report`), Unit Economics Analysis
  (`finance/unit-economics-analysis`), FinOps Cost Review
  (`ops/finops-cost-review`) for cloud cost detail, Month-End Close
  Checklist (`finance/month-end-close-checklist`) for the actuals.
-->

## Document control

<!-- Guidance: One analysis per reporting period and scope. Actuals must come from the closed ledger; record the close date so readers know the numbers are final. -->

| Field | Value |
|---|---|
| Document ID | [VAR-2027-Q1] |
| Organisation and scope | [Group / Segment / Entity] *Example:* Corvid Commerce Group, consolidated |
| Period analysed | [Month / Quarter / Year to date] *Example:* Q1 2027 (2027-01-01 to 2027-03-31) |
| Comparison bases | [Budget version], [Forecast ID] *Example:* BUD-FY2027 v1.0 |
| Ledger close date | YYYY-MM-DD |
| Currency and units | [EUR thousand at budget FX rates; FX shown separately] |
| Sign convention | [Favourable positive, adverse in parentheses] |
| Version | [0.1] |
| Status | [Draft / In review / Final] |
| Owner | [@head-of-fpa] |
| Approvers/reviewers | [@cfo], [@budget-holders] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential] |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Head of FP&A | [@name] | [Prepared] | YYYY-MM-DD |
| Chief Financial Officer | [@name] | [Approve / Return] | YYYY-MM-DD |
| Budget holders (commentary sign-off) | [@names] | [Confirmed] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change summary |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@name] | Numbers from closed ledger |
| 0.5 | YYYY-MM-DD | [@name] | *Example:* Budget holder commentary added |
| 1.0 | YYYY-MM-DD | [@name] | *Example:* CFO approved, included in the board report |

## Contents

<!-- Guidance: Keep this list aligned with the headings. -->

1. [Summary and materiality thresholds](#1-summary-and-materiality-thresholds)
2. [Method and formulas](#2-method-and-formulas)
3. [Revenue variance](#3-revenue-variance)
4. [Gross margin variance](#4-gross-margin-variance)
5. [Operating expense variance by cost centre](#5-operating-expense-variance-by-cost-centre)
6. [Headcount variance](#6-headcount-variance)
7. [Capital expenditure variance](#7-capital-expenditure-variance)
8. [Cash variance](#8-cash-variance)
9. [Root causes and one-off items](#9-root-causes-and-one-off-items)
10. [Forecast implications](#10-forecast-implications)
11. [Actions and owners](#11-actions-and-owners)
12. [Glossary and references](#12-glossary-and-references)

## 1. Summary and materiality thresholds

<!-- Guidance: Lead with the three or four messages the reader must take away, then the summary table. Set thresholds before you look at the numbers. Pitfall: commentary on every line, which buries the two variances that matter. -->

[Three to five bullet messages: overall result, main driver, whether it is timing or permanent, the action.]

*Example:*

- Q1 2027 revenue was EUR 36,200k, EUR 800k (2.2%) below budget. Commerce explains more than the whole gap (EUR 1,100k adverse), split between price (EUR 325k), volume (EUR 318k) and mix (EUR 457k, the largest part); subscription and services were each EUR 150k ahead.
- EBITDA was EUR 3,950k, EUR 150k below budget. The commerce revenue shortfall cost only EUR 430k of gross profit because the lost mix was low-margin hardware.
- Operating expense was EUR 140k below budget, mostly campaign timing in sales and marketing; research and development is over budget because contractors cover delayed hires.
- Cash was EUR 800k above budget because capital expenditure is EUR 700k behind plan. This is timing, not a saving.
- The commerce volume shortfall is expected to continue; the rolling forecast reduces commerce orders by 3.6% for the rest of the year.

| EUR thousand, Q1 2027 | Actual | Budget | Variance | Variance % | Above threshold? |
|---|---|---|---|---|---|
| Revenue *(Example)* | 36,200 | 37,000 | (800) | (2.2%) | Yes (amount) |
| Gross profit | 22,110 | 22,400 | (290) | (1.3%) | Yes (amount) |
| Operating expense before D&A | (18,160) | (18,300) | 140 | 0.8% | Yes (amount) |
| EBITDA | 3,950 | 4,100 | (150) | (3.7%) | Yes (amount) |
| Closing FTE | 692 | 705 | 13 below | (1.8%) | No |
| Capital expenditure | 1,900 | 2,600 | 700 | 26.9% | Yes |
| Closing cash | 27,900 | 27,100 | 800 | 3.0% | Yes (amount) |

| Threshold | Rule | Required response |
|---|---|---|
| Report *(Example)* | Variance of at least EUR 100k or 5% of the line | Budget holder commentary with cause and timing or permanent label |
| Investigate | Variance of at least EUR 250k or 10% of the line | Root cause analysis in section 9 and action in section 11 |
| Escalate | EBITDA variance of at least EUR 500k year to date, or any covenant headroom below [20%] | CFO note to executive committee within [5] working days |

## 2. Method and formulas

<!-- Guidance: State the method once so every period is computed the same way. Choose the mix method (here: sales-mix at budget prices with the volume variance at the budget average price) and keep it. Pitfall: changing method between periods, which makes trends meaningless. -->

Notation for product or segment i: BQ and AQ are budget and actual quantities, BP and AP budget and actual unit prices, BC and AC budget and actual unit costs, BQ total and AQ total the sums over all products. The budget mix share of product i is BQ_i divided by BQ total. The budget average price is budget revenue divided by BQ total.

$$
\text{Price variance} = \sum_i (AP_i - BP_i)\times AQ_i
$$

$$
\text{Volume variance} = (AQ_{total} - BQ_{total}) \times \overline{BP},
\qquad \overline{BP} = \frac{\sum_i BQ_i \times BP_i}{BQ_{total}}
$$

$$
\text{Mix variance} = \sum_i \left(AQ_i - AQ_{total}\times\frac{BQ_i}{BQ_{total}}\right)\times BP_i
$$

The three components add up to actual revenue minus budget revenue. For gross margin, replace the price with the unit margin (BP minus BC) in the volume and mix formulas and add a cost variance.

$$
\text{Cost variance} = \sum_i (BC_i - AC_i)\times AQ_i
$$

For results in other currencies, the FX translation variance is actual local-currency results translated at the actual rate minus the same results translated at the budget rate. Everything else in this template is at budget rates, so FX is isolated in one line.

$$
\text{FX variance} = \frac{A_{local}}{R_{actual}} - \frac{A_{local}}{R_{budget}}
$$

Rates R are quoted as local currency per EUR. For volume-driven costs (fulfilment, payment fees, hosting) compare actual cost with the budget flexed to actual volume, so the cost centre is not credited for low activity:

$$
\text{Flexed budget}_i = \text{Budget cost per unit}_i \times AQ_i
$$

## 3. Revenue variance

<!-- Guidance: Split each segment's variance into its drivers. Show the product-level table for the segment with the largest variance. Pitfall: calling everything "volume" when the real cause is a price discount or a mix shift. -->

### 3.1 Revenue by segment

| Segment | Actual | Budget | Variance | Price | Volume | Mix | FX |
|---|---|---|---|---|---|---|---|
| Subscription *(Example)* | 22,750 | 22,600 | 150 | 0 | 250 | 0 | (100) |
| Commerce | 11,300 | 12,400 | (1,100) | (325) | (318) | (457) | 0 |
| Professional services | 2,150 | 2,000 | 150 | 0 | 150 | 0 | 0 |
| **Total** | **36,200** | **37,000** | **(800)** | **(325)** | **82** | **(457)** | **(100)** |

Check: price, volume, mix and FX add to the variance: -325 + 82 - 457 - 100 = -800 (with commerce volume rounded from -317.9 and mix from -457.1).

- Subscription: higher ARR from early renewals and new logos added EUR 250k at budget rates. US subscription revenue of USD 6,160k translated at the actual average rate of 1.12 instead of the budget 1.10: 6,160 / 1.12 - 6,160 / 1.10 = 5,500 - 5,600 = -100.
- Professional services: 10,750 billable days against 10,000 budgeted, at the budget day rate of EUR 200: 750 x 0.200 = 150; no rate variance.
- Commerce is analysed by product category in section 3.2. Commerce orders are invoiced in EUR, so there is no FX effect.

### 3.2 Commerce price, volume and mix

Units in thousand, prices in EUR per unit, revenue in EUR thousand.

| Category | BQ | BP | Budget revenue | AQ | AP | Actual revenue | Budget mix | Actual mix |
|---|---|---|---|---|---|---|---|---|
| Hardware kits *(Example)* | 60 | 80.00 | 4,800 | 50 | 82.00 | 4,100 | 15.4% | 13.2% |
| Consumables | 200 | 25.00 | 5,000 | 205 | 24.00 | 4,920 | 51.3% | 53.9% |
| Accessories | 130 | 20.00 | 2,600 | 125 | 18.24 | 2,280 | 33.3% | 32.9% |
| **Total** | **390** | **31.79** | **12,400** | **380** | **29.74** | **11,300** | **100.0%** | **100.0%** |

Budget average price = 12,400 / 390 = 31.795; actual average price = 11,300 / 380 = 29.737.

| Category | Price variance | Standard quantity at budget mix (AQ total x budget mix) | Mix variance |
|---|---|---|---|
| Hardware kits *(Example)* | (82 - 80) x 50 = 100 | 380 x 60 / 390 = 58.46 | (50 - 58.46) x 80 = (677) |
| Consumables | (24 - 25) x 205 = (205) | 380 x 200 / 390 = 194.87 | (205 - 194.87) x 25 = 253 |
| Accessories | (18.24 - 20) x 125 = (220) | 380 x 130 / 390 = 126.67 | (125 - 126.67) x 20 = (33) |
| **Total** | **(325)** | **380.00** | **(457)** |

Volume variance = (380 - 390) x 31.795 = (318). Total: -325 - 318 - 457 = -1,100, which equals 11,300 - 12,400.

Reading the result: customers bought fewer units (volume), received deeper discounts on consumables and accessories (price) and shifted away from high-priced hardware kits (mix). The hardware price rose, but on fewer units.

## 4. Gross margin variance

<!-- Guidance: Revenue variances overstate the profit effect when the lost sales carry a low margin. Recompute volume and mix at unit margin and add the cost variance. Pitfall: reporting the revenue mix variance as if it were a profit loss. -->

| Segment | Actual GP | Budget GP | Variance | Actual GM % | Budget GM % |
|---|---|---|---|---|---|
| Subscription *(Example)* | 18,150 | 18,080 | 70 | 79.8% | 80.0% |
| Commerce | 3,290 | 3,720 | (430) | 29.1% | 30.0% |
| Professional services | 670 | 600 | 70 | 31.2% | 30.0% |
| **Total** | **22,110** | **22,400** | **(290)** | **61.1%** | **60.5%** |

Cost of sales: subscription 4,600 actual against 4,520 budget (hosting usage above plan; see FinOps Cost Review (`ops/finops-cost-review`)); commerce 8,010 against 8,680; services 1,480 against 1,400 (more days delivered).

### 4.1 Commerce gross margin decomposition

| Category | BC | AC | Budget unit margin | Cost variance | Mix variance at unit margin |
|---|---|---|---|---|---|
| Hardware kits *(Example)* | 64.00 | 65.00 | 16.00 | (64 - 65) x 50 = (50.0) | (50 - 58.46) x 16 = (135.4) |
| Consumables | 15.10 | 15.00 | 9.90 | (15.10 - 15.00) x 205 = 20.5 | (205 - 194.87) x 9.90 = 100.3 |
| Accessories | 14.00 | 13.48 | 6.00 | (14.00 - 13.48) x 125 = 65.0 | (125 - 126.67) x 6 = (10.0) |
| **Total** | | | | **35.5** | **(45.1)** |

Budget cost of sales: 60 x 64 + 200 x 15.10 + 130 x 14 = 3,840 + 3,020 + 1,820 = 8,680. Actual: 50 x 65 + 205 x 15 + 125 x 13.48 = 3,250 + 3,075 + 1,685 = 8,010.

| Commerce gross profit bridge | EUR thousand |
|---|---|
| Budget gross profit *(Example)* | 3,720 |
| Sales price variance | (325.0) |
| Cost variance | 35.5 |
| Volume variance at budget average unit margin: (380 - 390) x 3,720 / 390 | (95.4) |
| Mix variance at unit margin | (45.1) |
| **Actual gross profit** | **3,290** |

Check: 3,720 - 325.0 + 35.5 - 95.4 - 45.1 = 3,290. The revenue mix variance of (457) shrinks to (45) at margin level because hardware kits sell at a high price but a 20% margin.

## 5. Operating expense variance by cost centre

<!-- Guidance: Each budget holder explains their variance and labels it timing (will reverse) or permanent. Flex volume-driven costs. Pitfall: celebrating underspend that is only delayed spend. -->

| Cost centre group | Actual | Budget | Variance | Timing or permanent | Explanation | Budget holder |
|---|---|---|---|---|---|---|
| Sales and marketing *(Example)* | 8,450 | 8,800 | 350 | Timing 300, permanent 50 | US campaign launched in April instead of March (300); travel and events below plan (50) | [@marketing-director] |
| Research and development | 6,150 | 5,900 | (250) | Permanent (320), timing 70 | Contractors in Germany cover delayed Vietnam hires (470 contractor cost less 150 salary saving = 320 adverse); tool licences billed in April (70 favourable) | [@cto] |
| General and administrative | 3,560 | 3,600 | 40 | Timing | Audit fee accrual phased | [@financial-controller] |
| **Total** | **18,160** | **18,300** | **140** | | | |

| Variance ID | Line | Amount | Classification | Detail |
|---|---|---|---|---|
| OPX-001 *(Example)* | CC-120 Brand marketing | 300 | Timing | Campaign moved from March to April |
| OPX-002 *(Example)* | CC-310 R&D platform | (320) | Permanent | Contractor cost 470 at EUR 95 per hour, less 150 salary saving on 15 unfilled roles (budgeted start dates in January to March; the maximum saving if all 15 had been budgeted from 1 January is 15 x 48 x 3 / 12 = 180) |
| OPX-003 *(Example)* | CC-330 R&D tools | 70 | Timing | Annual licence invoice received in April |

Cloud hosting and other usage-based costs in cost of sales should be compared with the flexed budget; payment processing fees for commerce are flexed to actual order count.

## 6. Headcount variance

<!-- Guidance: Show headcount and cost together. A headcount shortfall usually reduces cost but may cause other cost (contractors, overtime) or lost revenue. Pitfall: reporting the FTE variance without its knock-on effects. -->

| Function | Actual FTE 2027-03-31 | Budget FTE | Variance | Cost effect | Knock-on effect |
|---|---|---|---|---|---|
| Delivery and customer operations *(Example)* | 166 | 165 | 1 above | Small | Supports higher services days |
| Sales and marketing | 207 | 205 | 2 above | Included in OPX lines | Earlier hires in US |
| Research and development | 223 | 238 | 15 below | Saving 150 | Contractors cost 470, net (320) in OPX-002 |
| General and administrative | 96 | 97 | 1 below | Small | None |
| **Total** | **692** | **705** | **13 below** | | |

The 15 open R&D roles are in the Vietnam engineering hub; the hiring plan is re-phased in Rolling Forecast (`finance/rolling-forecast`), decision D-002.

## 7. Capital expenditure variance

<!-- Guidance: Report capex by project, separating timing (slipped spend) from scope or cost changes. Pitfall: treating an underspend as available money for new projects. -->

| Capex ID | Project | Actual | Budget | Variance | Classification |
|---|---|---|---|---|---|
| CAP-001 *(Example)* | Platform features (capitalised development) | 1,450 | 1,500 | 50 | Timing |
| CAP-002 *(Example)* | Warehouse automation, Leipzig | 0 | 500 | 500 | Timing: capex request in approval |
| CAP-003 *(Example)* | IT hardware refresh | 450 | 600 | 150 | Timing |
| CAP-004 *(Example)* | Office fit-out, Ho Chi Minh City | 0 | 0 | 0 | Scheduled Q2 |
| **Total** | | **1,900** | **2,600** | **700** | |

Project approvals and post-completion comparisons follow Capex Request (`finance/capex-request`).

## 8. Cash variance

<!-- Guidance: Bridge budgeted to actual closing cash by cause. Keep it consistent with the EBITDA and capex variances above. Pitfall: explaining cash only by "working capital" without naming receivables, inventory or payables. -->

| Bridge item | EUR thousand |
|---|---|
| Budget closing cash 2027-03-31 *(Example)* | 27,100 |
| EBITDA variance | (150) |
| Trade receivables 600 below budget (12,070 against 12,670) after faster marketplace collections | 600 |
| Commerce inventory higher than plan | (350) |
| Capital expenditure behind plan | 700 |
| **Actual closing cash** | **27,900** |

Check: 27,100 - 150 + 600 - 350 + 700 = 27,900. On the quarter-based formula in Monthly Management Report (`finance/monthly-management-report`) section 4.2, receivables are 30.0 days of Q1 revenue against 30.8 days in the budget (12,670 / 37,000 x 90); quote balances, not days, in the cash bridge, because days move with the revenue denominator as well as with collections. USD cash is translated at the closing rate; the translation effect was below EUR 10k this quarter. For weekly cash management see 13-Week Cash Flow Forecast (`finance/13-week-cash-flow-forecast`).

## 9. Root causes and one-off items

<!-- Guidance: For each variance above the investigation threshold, ask why until you reach a cause someone can act on. Label one-off items and exclude them from the run-rate. Pitfall: stopping at the first "why" (for example "volume was low"). -->

| ID | Variance | Amount | Root cause | Evidence | One-off? |
|---|---|---|---|---|---|
| RC-001 *(Example)* | Commerce volume and mix | (775) | Hardware kit demand fell after a competitor launched a cheaper kit in February; customers bought consumables for kits they already own | Order data by SKU, win-loss survey | No |
| RC-002 *(Example)* | Commerce price | (325) | Consumables and accessories discounted to clear Q4 inventory | Promotion calendar, discount report | Partly: clearance ended in March |
| RC-003 *(Example)* | R&D contractors | (320) | Vietnam hiring took eight weeks longer than planned because of salary benchmark gaps | Recruiter pipeline report | No, until hires land |
| RC-004 *(Example)* | Capex timing | 700 | Warehouse automation capex request still in approval | Capex register | Timing |

Commerce volume and mix combined: -318 - 457 = -775 (revenue).

```mermaid
flowchart TD
  A["Commerce revenue EUR 1,100k below budget"] --> B["Volume and mix (775)"]
  A --> C["Price (325)"]
  B --> D["Hardware kit units 17% below budget"]
  D --> E["Cheaper competitor kit launched in February"]
  C --> F["Clearance discounts on consumables and accessories"]
  F --> G["Q4 inventory overbuy"]
```

Hardware kit units: (50 - 60) / 60 = -16.7%.

## 10. Forecast implications

<!-- Guidance: Decide, for each material variance, whether it changes the outlook. Feed the result to the rolling forecast as driver changes. Pitfall: assuming every adverse variance will "catch up" by year end. -->

| Variance ID | Carry forward? | Driver change | Full-year effect (revenue / EBITDA) | Forecast reference |
|---|---|---|---|---|
| RC-001 *(Example)* | Yes | Commerce orders -3.6% for Q2 to Q4 | (1,500) / (450) | DRV-004 in RF-2027-Q1 |
| RC-002 *(Example)* | No | Discounts end with clearance | 0 / 0 | None |
| RC-003 *(Example)* | Partly | Ten Vietnam hires start in October instead of April | 0 / 300 | D-002 |
| OPX-001 *(Example)* | Reverses in Q2 | Campaign spend in April | 0 / 0 | Phasing only |
| FX (subscription) *(Example)* | Yes | EUR/USD 1.12 for Q2 to Q4 | (300) / (250) | DRV-009 |

## 11. Actions and owners

<!-- Guidance: Every action has an owner, a due date and a measure of success, and is reviewed in the next variance analysis. Pitfall: actions without a date, which roll forward unchanged every month. -->

| Action ID | Action | Owner | Due | Success measure | Status |
|---|---|---|---|---|---|
| ACT-001 *(Example)* | Launch a lower-priced hardware kit bundle with consumables subscription | [@commerce-director] | YYYY-MM-DD | Hardware units within 5% of forecast in Q3 | Open |
| ACT-002 *(Example)* | Tighten Q4 inventory buy to forecast volume | [@commerce-director] | YYYY-MM-DD | Inventory days at or below the budget 52 (Annual Budget ASM-012) | Open |
| ACT-003 *(Example)* | Update Vietnam salary bands and add a second recruiter | [@chro] | YYYY-MM-DD | Five open roles filled by 2027-07-31; ten October starters signed by 2027-08-31 | Open |
| ACT-004 *(Example)* | Submit CAP-002 capex request to the investment committee | [@coo] | YYYY-MM-DD | Decision recorded | Open |
| ACT-005 *(Example)* | Review cloud usage above plan | [@cto] | YYYY-MM-DD | Hosting cost within flexed budget | Open |

### 11.1 How to complete and review the analysis

Prepare the analysis in a fixed order so that each step uses settled numbers. Start when the ledger is closed and the management accounts are locked: a variance analysis built on provisional numbers will be rewritten, and budget holders lose confidence in it. Confirm that the budget column is the approved, frozen version and that it is phased by month on the same basis as the actuals. Then compute the variances, apply the thresholds from section 1 and send each budget holder only the lines above the reporting threshold, with the numbers already computed. Ask for a cause, a timing or permanent label and the effect on the full year; do not ask them to recompute the variance.

Review the commentary before it reaches the CFO. A good explanation names a cause that someone can act on and gives evidence: "a competitor launched a cheaper kit in February, visible in the win-loss survey" is an explanation; "volume was lower" restates the number. A timing label must say when the variance reverses, and the next analysis must check that it did. Where a budget holder reports a saving that depends on delayed spending, ask whether the spending is still needed and when it will land.

Check the arithmetic at every level. The price, volume, mix and FX components must add to the total variance for each segment; the segment variances must add to the group; the gross margin bridge must start at budget gross profit and end at actual gross profit; and the cash bridge must agree to the closing cash in the balance sheet. When rounding causes a difference, say so in the check line rather than forcing a figure. Reconcile the headcount variance with the people cost variance: if 15 roles are open for a quarter, the salary saving cannot exceed 15 x the loaded monthly cost x 3, whatever the budget holder reports.

Common errors to look for:

- Volume-driven costs compared with a static budget, which credits a cost centre for low activity. Flex fulfilment, payment and hosting costs to actual volume first.
- Day measures used to explain cash movements. Days move with the revenue or cost denominator as well as with collections; explain cash with balances and use days only as a trend indicator on a stated formula.
- Mix variances reported at revenue level only. A large adverse revenue mix can be small at margin level, as in section 4, and the margin view is what matters for EBITDA.
- FX translation buried in volume. Translate local-currency results at the budget rate first, then show the difference to the actual rate in its own column.
- Carry-forward decisions left implicit. For every material variance, record in section 10 whether it changes the forecast and which driver carries it.

File the analysis with the ledger close date and the budget version in Document control, so that a later reader can reproduce it.

Keep the presentation short. The executive summary in section 1 should fit on one page, lead with the result and its cause, and say whether the outlook changes. Put the detailed decomposition tables after it for readers who want to test the numbers. When the same variance appears month after month, stop explaining it as new: say how many periods it has persisted, whether the forecast already reflects it, and what decision is outstanding.

Agree the distribution list in advance. Budget holders receive their own lines and the group summary; the executive committee receives the full analysis; the board usually receives the summary through Monthly Management Report (`finance/monthly-management-report`) or Board Pack (`business/board-pack`). Lenders receive only what the facility agreement requires, on its definitions, never this internal analysis.

Actions from the previous analysis:

| Action ID | Action | Outcome | Closed? |
|---|---|---|---|
| [ACT-NNN] | [Action] | [Result] | [Yes / No, reason] |

## 12. Glossary and references

<!-- Guidance: Keep definitions stable across periods. -->

### 12.1 Glossary

| Term | Meaning in this template |
|---|---|
| Variance | Actual minus budget (or forecast), signed so that favourable is positive |
| Favourable / adverse | Better / worse for profit or cash than the comparison base |
| Price variance | Effect of actual selling prices differing from budget, on actual quantities |
| Volume variance | Effect of total quantity differing from budget, at the budget average price or margin |
| Mix variance | Effect of the product mix differing from budget, at budget prices or margins |
| Cost variance | Effect of actual unit costs differing from budget, on actual quantities |
| FX translation variance | Effect of translating foreign-currency results at actual instead of budget rates |
| Flexed budget | Budget cost restated for actual activity volume |
| Timing variance | Variance that will reverse in a later period |
| Permanent variance | Variance that will not reverse |

### 12.2 References

| Reference | Version or date checked | Use |
|---|---|---|
| CIMA Official Terminology (Chartered Institute of Management Accountants) | Name only | Context for management accounting variance terms |
| [Group FP&A manual: variance policy and thresholds] | [Version] | Thresholds and sign convention |
| [Group accounting manual: FX translation rates] | [Version] | Budget and actual rates |

## Standard and licence note

Structure aligned with common management accounting practice for
budget variance analysis; no standard prescribes the format. The price,
volume, mix, cost and FX formulas are general arithmetic and are written
here in original form. CIMA Official Terminology is cited by name only;
no text from it is reproduced. Corvid Commerce Group and every figure
are fictional. This template is original text written for this
collection. Check your organisation's current policies before use.
Template licence: MIT.