Budget vs Actual Variance Analysis AI Prompt

Analyze the variance between budget and actual results for this period.

Budget data: {{budget}}
Actual data: {{actuals}}
Period: {{period}}

1. Variance calculation:
   For each P&L line item:
   - Budget amount
   - Actual amount
   - Absolute variance: Actual - Budget
   - Percentage variance: (Actual - Budget) / |Budget| x 100%
   - Favorable (F) or Unfavorable (U): revenue above budget = F, cost above budget = U

2. Materiality threshold:
   - Define materiality: variances > {{threshold}}% or > ${{amount}} warrant explanation
   - Flag all variances exceeding the threshold

3. Revenue variance decomposition:
   Total Revenue Variance = Volume Variance + Price/Mix Variance
   - Volume variance: (Actual Volume - Budget Volume) x Budget Price
   - Price variance: (Actual Price - Budget Price) x Actual Volume
   - Mix variance: if applicable (multiple products/services)

4. Cost variance decomposition:
   Total Cost Variance = Volume Variance + Efficiency Variance + Rate Variance
   - Volume variance: expected cost at actual volume - budget cost
   - Efficiency variance: actual hours/units x budget rate - expected at actual volume
   - Rate variance: (Actual Rate - Budget Rate) x Actual hours/units

5. Root cause narrative:
   For the top 5 variances by magnitude:
   - Explain what drove the variance
   - Is it a one-time item or ongoing?
   - Is it within the business's control?
   - What is the forecast impact for the rest of the year?

6. Year-to-date and full-year implications:
   - YTD variance as % of full-year budget
   - Updated full-year forecast based on current run rate

Return: variance table with F/U flags, decomposed revenue and cost variances, root cause narratives, and updated full-year forecast.