What Does Profit Variance Mean?
Profit variance refers to the difference between actual profit and expected profit. It is a metric used to evaluate the financial performance of a company and to identify the reasons for any deviations from the expected profit. By calculating profit variance, managers can gain insights into the factors that led to the difference between planned and actual profit, which can help in making better decisions for future planning and budgeting. A positive profit variance indicates that the actual profit is higher than the expected profit, while a negative profit variance indicates the opposite.