In performance reporting, the term used to indicate a difference between actual performance and planned activity is known as a(n) .

In performance reporting, the term used to indicate a difference between actual performance and planned activity is known as a variance. Variance analysis is a key component in performance management and financial analysis. It helps organizations understand the reasons behind deviations from their expected performance metrics.

There are typically two types of variances: favorable and unfavorable. A favorable variance occurs when actual performance exceeds planned performance, suggesting better efficiency or effectiveness than anticipated. Conversely, an unfavorable variance indicates that actual performance is below what was planned, which may prompt a review of processes, costs, or resource allocation.

By regularly assessing these variances, companies can make informed decisions to improve future planning and operational execution. This practice not only aids in evaluating past performance but also enhances strategic alignment with organizational goals.