How is a 'budget variance' defined?

A budget variance is defined as the difference between budgeted and actual spending. This concept is crucial for financial management as it allows organizations to analyze and understand discrepancies between what they planned to spend and what they actually incurred. A positive variance indicates that actual spending was less than budgeted, while a negative variance suggests overspending. This metric helps in evaluating financial performance and aids in future budgeting processes by identifying areas where spending did not align with expectations.

In contrast, the total amount of revenue earned outlines income generation but does not directly address budget tracking. The difference between forecasted and actual revenue focuses on revenue predictions rather than expenditure, making it less relevant in the context of budget variance. Lastly, the total cost of cloud resources used provides a total expenditure figure but lacks the comparative aspect integral to the definition of a variance, as it does not reference a budgeted amount.