Film Accounting Glossary
Variance
What is a variance?
Also called budget variance.
A variance is the difference between the budget and the estimated final cost on a line, department, or the whole picture, expressed as a favorable saving or an unfavorable overage.
Variance reporting is the point of the cost report: the totals tell you whether there is a problem and the line-level variances tell you where. A variance without an explanation is an open question, which is why every material one carries a written note.
Example
A line reads budget $180,000, estimated final cost $201,500: a $21,500 unfavorable variance. The total tells a producer there is a problem; only the line-level variance says it is in transportation, and only the note says it is the two extra vehicles for the finale.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Calculated per line in the cost report, with every material one carrying a written explanation in the variance report.
Common mistake
Reporting a variance with no explanation attached. An unexplained number is an open question, and it will be asked by whoever reads the report.
Related questions
- How is a budget variance calculated?
- The difference between the approved budget and the estimated final cost on a line, department, or the picture, shown as favorable or unfavorable.
- What is a favorable variance?
- A projected saving against budget. It still needs explaining, because a saving caused by work not yet ordered is not a saving at all.