Volume variance is best defined as the difference between which two values?

Volume variance is best defined as the difference between flexible revenues and static budgeted revenues. This concept is crucial in laboratory management and financial analysis, as it assesses how changes in volume affect revenue generation when comparing actual performance to budgeted expectations.

When a budget is set, it is often based on static assumptions, such as expected patient volume or test volumes. The flexible budget adjusts those figures based on the actual activity level, allowing for a more accurate representation of revenue potential under current conditions. By comparing the flexible revenues, which reflect the actual operational capacity, to the original static budgeted revenues, which may not account for additional volume, one can ascertain how much revenue was impacted by changes in workload.

This variance provides insight into how effectively the laboratory is running relative to its predicted capacity. It helps management make informed decisions regarding resource allocation, staffing needs, and overall financial health. Understanding this variance is essential for ensuring that any discrepancies in financial performance can be traced back to either increased patient volume or other operational factors.