Chapter 6: Variance Reporting

CHAPTER 6: VARIANCE REPORTING

Objectives
The objectives are

Create an over/(under) variance column definition

Define a report that displays favorable/(unfavorable) variances

Introduction
Reporting on variances either actual versus budget, this year versus last year
is a common financial reporting format. Two methods are generally used when
you are reporting on variances.
In the simpler method, one of the two amounts being compared is deducted from
the other. No allowance is made for the type of accounts being reported. For
example, if actual minus budget results in a positive umber, then regardless of the
account type (revenue or expense) the variance is said to be positive. This type of
variance is known as over/ (under) variances in the upcoming exercises.
In the second method of variance reporting, known as favorable/(unfavorable),
the type of account is also taken into consideration. For example, in revenue
accounts, if actual results are higher than those budget the variance is displayed
as favorable. However, if actual expenses are higher than budget, then that
variance is displayed as unfavorable.
The key to the second method is the XCR print control used exclusively in
calculated variance columns. When XCR matches up with a C in the normal
balance f a row, it reverses the sign of the variance calculation result. Therefore,
Cs are also place on total rows that related to accounts display a C such as Net
Sales or Net Income.

Over/(Under) Variances
Although not as common a variance display as favorable/(unfavorable), the
over/(under) method is a straightforward method for comparing he difference in
two amounts.

Over/(Under) Column Definition

The following steps define the process for create a current period, actual versus
budget report.

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1. In the status bar, double-click GLMF. In the Companies dialog, scroll
down until USMF is displayed in the list. Click on USMF and select Set
As Default.
2. On the File menu, point to New, then click Column Definition.
3. In column A, Column Type, double-click and select DESC (Row
Descriptions). The default column width of 30 characters can be updated
as you want, however, the changes only display in the generated report.
4. Repeat Step 2 in columns B and C, selecting the FD column type.
5. In column C, double-click the Book Code/Attribute Category, and
select FY2012.
6. In column D, select CALC column type.
7. In the Formula field, type B-C.
8. Type the following descriptions into the Header 2 row:
a. Column B Actual
b. Column C Budget
c. Column D Over/(Under)
9. Save the column definition with the name Actual Budget Over Under.

FIGURE 6.1 ACTUAL BUDGET OVER UNDER COLUMN DEFINITION

Open a Report Definition

The over/under column design is associated with the summary income statement
row definition in the following steps.
1.
2.
3.
4.
5.

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Click the Report Definitions button on the navigation pane.

Double-click Summary Income Statement with CBR.
On the File menu, click the Save As menu item.
Type the name Summary Income Statement Over Under.
Click OK.

Chapter 6: Variance Reporting

Generate Report
To generate the report, follow these steps:
1. Click the Company drop-down arrow and select USMF.
2. Click the Column drop-down arrow and select Actual Budget Over
Under.
3. Click on the Settings tab and select the Other formatting option,
Display negative numbers in red. Clear the Display rows with no
amounts option.
4. Update the Spaces between columns to 1.
5. Save the report definition and then click Generate Report.
Notice that the complete report displays all negative values in red, while the
over/under column reports the difference of actuals results, minus budget
expectations.

FIGURE 6.2 ACTUAL BUDGET OVER UNDER REPORT

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Favorable/(Unfavorable) Variances
The column design for favorable/(unfavorable) reporting is similar to the
over/under design, with two primary differences: the calculation formula is
reversed and the XCR print control is activated.

FIGURE 6.3 ACTUAL BUDGET FAVORABLE UNFAVORABLE REPORT

Favorable/(Unfavorable) Column Definition

The over/under column design is used as a starting template for the
favorable/unfavorable design that is created in the following steps.
1.
2.
3.
4.
5.
6.

Click the Column Definitions button on the navigation pane.

Double click Actual Budget Over Under.
On the File menu, click the Save As menu item.
Type the name Actual Budget Favorable Unfavorable.
Click OK.
Double-click column D, Header 1 and in the Column header text, type
Favorable/. Click the Format options down arrow and select None.
Click OK.
7. Click in Header 2 and update the text to read (Unfavorable).
8. In the Formula field, type C-B. In this method of variance reporting,
the basis for comparison comes first in the formula.
9. Double-click the Print Control field, select XCR, and then click OK.

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10. Save the column definition.

FIGURE 6.4 ACTUAL BUDGET FAVORABLE UNFAVORABLE COLUMN DEFINITION

How XCR Works

When the XCR print control is included in a calculation column type, the basic
variance formula of actual minus budget or budget minus actual is expanded to
consider the type of account being reporting on. The account type is determined
by the placement of Cs in the Normal Balance field of the row definition.
1. Click the Row Definitions button on the navigation pane.
2. Double-click Summary Income Statement
Cs are placed on rows that link to the financial data source to flip the balance of
the account for presentation in the report. If a C is present, XCR reverse the sign
of the result of the variance calculation. Totals do not require a C in non-variance
reporting; however, a C is required to correctly calculate the variance on totals
that will display a credit balance if account presentation had not been flipped.

View the Report

A new report definition is created based on the over/under report design.
1.
2.
3.
4.

Click the Report Definitions button on the navigation pane.

Double-click Summary Income Statement Over Under
On the File menu, click the Save As menu item.
Update the name to read Summary Income Statement Favorable. Click
OK.

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5. Click the Column drop-down arrow and select Actual Budget Favorable
Unfavorable.
Save the report definition and then click Generate Report. The
completed report displays.

Modify to include variance percentages

In addition to dollar variances, you can add a percentage variance column to the
favorable/unfavorable design.
1. Return to Report Designer and then click the Open column definition
icon.
2. In column E, select the CALC column type.
3. Type the formula D/C.
4. Double-click column D, Header 1. Update the column header text to
read Favorable/(Unfavorable).
5. Select the Box format option and Spread from D to E. Click OK.
6. Click column D, Header 2 and press the Delete key. Type a currency
symbol $. Click column E, Header 2and type a percent sign %.
7. Double-click column E, Format/Currency Override. Select
Percentage. Click Ok.
8. Save the changes to the column definition.

FIGURE 6.5 UPDATED ACTUAL BUDGET FAVORABLE UNFAVORABLE COLUMN DEFINITION

Re-generate a report
Return to the report definition to generate the revised design.
1. Click the Open Report Definition icon.
2. Click Generate Report. The generated report displays.

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Summary
Variance reports are designed when users want to display the difference between
two columns of results. The two methods of designing variance reports are:
over/(under) and favorable/(unfavorable). When using the
favorable/(unfavorable) method, the print control XCR is applied in combination
with the C normal balance code in the row definition to present the correct sign
on the variance. Variances can be presented in dollar or percentage formats.

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Quick Interaction: Lessons Learned

Take a moment and write down three key points you have learned from this
chapter
1.

2.

3.

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