Differencies (Variances) for revenue and costs
System
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In Osborn Tutorial book the different formula for calculating variances is used:
for revenue: (actual - forecast)
so, if we have "+" - it is good
and if we have "-" - it is bad
for costs: (forecast - actual)
so, if we have "+" - it's good (we spent less money)
if it's "-" - we spent more, which is not good...
Our tutor sad, that what is written in the book is wrong and that we should use the same formula for revenue and costs: actual - forecaast.
Who is right - the tutor or AAT book???
for revenue: (actual - forecast)
so, if we have "+" - it is good
and if we have "-" - it is bad
for costs: (forecast - actual)
so, if we have "+" - it's good (we spent less money)
if it's "-" - we spent more, which is not good...
Our tutor sad, that what is written in the book is wrong and that we should use the same formula for revenue and costs: actual - forecaast.
Who is right - the tutor or AAT book???
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