The variance report is one of the most commonly used management accounting reports. The variance report in Farm Focus includes values, quantities, and percentages to help you identify the variance between two different sets of data. The report can be customised to suit your needs.
When to use the report
At the beginning of the year to identify whether your plan is realistic compared to historical performance.
Throughout the year to determine how you are tracking.
At the end of the year to compare this years actuals to the previous years actuals.
To compare different budget scenarios.
To identify areas where you are over or under income or expenditure and understand the reasons why.
How to create the report
Go to Reports > Variance.
Select the two sets of data you want to compare.
Column A should have the main source of data.
Column B should be the data you want to compare against.
Select the date range you wish to report on.
Select Payment date to include all items that have been paid within the selected timeframe OR select Accrual view to include all items that have been invoiced within the selected timeframe. Learn more about Accrual reporting here.
Click Apply to display the report.
TIP: the date range defaults to the full financial year but a custom date range can be selected.
Quantity columns. Quantity columns can be switched on or off by using the view icon in the top right hand corner and selecting or unselecting the checkbox. The quantity column is relevant for items such as milk solids, fertiliser, or livestock numbers purchased and sold.
GST Exclusive / GST Inclusive. Report can be viewed as GST Exclusive or GST Inclusive.
Section, category or extended code detail. Use the chevron's on the left hand side of the report to collapse or expand the report to the required level of detail. This can be useful to understand the variance at a high level or more detailed level, depending on your needs.
Filter. Use the filter icon in the top right hand corner to filter for codes, bank account or by tag. This can be useful if you want to focus on a specific part of your business.
How is the Variance calculated?
If you select the information icon on the variance column, it will give you an explanation of how the Variance in Farm Focus is calculated.
Calculation = (Column A / Column B) x 100
If Column A is greater than Column B the percentage will be > 100%
If Column A is less than Column B the percentage will be < 100%
If Column A and Column B are equal, the percentage will be 100%
How to interpret the data
a. The variance column will show the dollar ($) variance, the quantity variance, and the variance percentage (%).
b. Any variances that are less than $1000 will not show a percentage.
c. Any variances that are over 999% will be capped at 999%.
TIP: Utilise the settings or filter icons, so you are only viewing the data that is required.
TIP: For larger values, look at the actual dollar variation rather than the percentage variation. The percentage variation for a large income or expense may only be a few percent but it could be a significant amount of money.
Remember to check out the YTD Variance report