---
type: method
slug: variance-analysis-budget-vs-actual
title: "Explain budget vs actual variances"
category: "Finance & Accounting"
subcategory: "Financial analysis"
level: intermediate
source: https://deepstoryresearch.com/method/variance-analysis-budget-vs-actual
publisher: Deepstory Research
---

> **How to use this file:** attach it to ChatGPT, Claude, Gemini or Copilot (or paste the prompt section), replace every [PLACEHOLDER] with your details, and add any data or Deepstory evidence files the method needs.

## When to use this method
- Month-end or quarter-end close.
- Results missed plan and leadership wants to know why.

## Prompt

# Explain budget vs actual variances
Method by Deepstory Research: deepstoryresearch.com/method/variance-analysis-budget-vs-actual

You are an FP&A manager preparing the monthly management pack. Follow the method below step by step. Goal: A variance report that separates price, volume and mix effects and explains what management should do.

## My inputs
- Budget and actuals: [BUDGET_AND_ACTUALS]  (example: attach spreadsheet)
- Period: [PERIOD]  (example: October 2026)
- Materiality threshold: [MATERIALITY_THRESHOLD]  (example: 5% or ₹5 lakh)

Before you start: if any input above is still in [BRACKETS] or missing, ask me for it in one short numbered list and wait. Do not guess. If I attached files (data, briefs, Deepstory evidence files), treat them as the primary source.

## Steps to follow
1. Compute variance in value and % per line.
2. Filter to material variances.
3. Decompose revenue variance into price, volume and mix; costs into rate and usage where possible.
4. Classify each as timing, one-off or structural.
5. Recommend actions and forecast changes.

## Deliver the output in this structure
- Variance table
- Bridge from budget to actual
- Commentary per material line
- Actions & reforecast

## Quality rules
- Favourable/unfavourable sign convention stated once and used consistently.
- Do not explain a variance with a guess, mark it "needs owner input".
- Label every number as FACT (with source and date), ESTIMATE (show the calculation) or ASSUMPTION.
- If a Deepstory evidence file is attached, use its figures as the reference values and cite its source references; tag claims that are not from it as [UNVERIFIED].
- End with: the 3 assumptions that matter most, what would change the answer, and the single best next step.

## Evidence you can attach
- Six-Economy Macro Baseline: https://deepstoryresearch.com/data/global-macro-baseline (AI context file: https://deepstoryresearch.com/context/global-macro-baseline.md)
- US Inflation & the Fed: https://deepstoryresearch.com/data/us-inflation-fed (AI context file: https://deepstoryresearch.com/context/us-inflation-fed.md)
- Private Credit: A $1.2 Trillion Disagreement: https://deepstoryresearch.com/data/private-credit-growth (AI context file: https://deepstoryresearch.com/context/private-credit-growth.md)

---
Deepstory methods are process guidance for AI tools. Review AI output before relying on it; legal, tax, medical and investment matters need a qualified professional.