What indicates a positive budget variance?

A positive budget variance occurs when actual performance is better than what was budgeted. In this context, when actual revenue exceeds budgeted amounts, it indicates that the organization has generated more income than expected, thus resulting in a better financial position than planned. This is a favorable outcome, as it suggests increased profitability or improved sales performance.

When analyzing budget variances, positive variances are crucial for financial health, reflecting efficiency and effective management. Unlike actual expenses exceeding the budgeted amounts or revenue matching budgeted expectations, which do not signify improvement, a scenario where actual revenue surpasses the budget demonstrates growth and successful financial strategies.