Calculate and interpret the volume and management variances on the cost side.  Static Budget flexible Budget Actual Results revenues $4.7 $4.8 $4.5  Costs $4.1 $4.1 $4.2  Profits $0.6 $0.7 $0.3.

The volume and management variances are important metrics to analyze when assessing how well a business is performing relative to its budget. The volume variance measures the difference between actual results versus what was expected while the management variance looks at differences between what was planned versus what actually happened in terms of costs.

In order to calculate these variances, we must first compare the static budget with the flexible budget as this will help determine if any changes have occurred over time due to price or quantity adjustments. For example, let’s say that an organization had revenues of $4.7 million according to their static budget but then they make changes which leads to a flexible budget of $4.8 million in revenues instead – this would generate an increase in volume variance equal to $0.1 million ($4.8 minus $4.7).

On the cost side, we can similarly calculate both volume and management variances by comparing results from the static and flexible budgets with actual figures reported for costs incurred during a certain period (in our example it was $4.2 million). In this case, the volume variance is calculated by subtracting expected costs from actual ones which gives us a decrease in volume variance equal to -$0.1 million ($4