Sales variance is the difference between actual sales and budget sales. It is used to measure the performance of a sales function, and/or analyze business results to better understand market conditions.
There are two reasons actual sales can vary from planned sales: either the volume sold varied from plan (sales volume variance), or sales were at a different price from what was planned (sales price variance). Both scenarios could also simultaneously contribute to the variance.
For example: The plan was to sell 5 widgets at $3 each, for a budgeted sales of: (5*$3)=$15. In reality, 6 widgets were sold at $2 each, for an actual sales of: (6*$2)=$12. The total variance was thus ($12-$15)=$3 (U)nfavourable or minus $3, since total sales was less than planned.
Read more about Sales Variance: Sales Price Variance, Sales Volume Variance, Total Variance
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