All 38 Variance Analysis questions
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Budgeting & Forecasting › Variance Analysis

What is the difference between a budget and a standard?

Beginner

Answer

A standard is a per-unit predetermined cost or performance level; a budget is the total plan for a period. Standards are the building blocks—multiplying a standard by planned volume helps build the budget. Variance analysis compares actuals to standards (per unit) and to the flexed budget (in total).
Real-world example The standard cost per unit times budgeted units builds the total materials budget.

Common follow-ups: How do standards build budgets? | Which is per-unit?

Types of Budgets The Budgeting Process Variance Analysis
All 38 Variance Analysis questions