Which of the following is an important metric for monitoring performance against the budget?

Variance is a crucial metric for monitoring performance against the budget because it represents the difference between the budgeted figures and the actual results. By calculating variance, management can identify areas where performance deviates from expectations—either positively or negatively. This insight allows for better decision-making and adjustments in operations to align with the financial goals.

Monitoring variance helps to understand not only whether the budget was met but also the reasons behind any shortfalls or excesses. For instance, if expenditures are higher than budgeted, analyzing the variance could reveal specific areas of overspending that require further investigation. Similarly, if revenue exceeds expectations, understanding the positive variance can highlight successful strategies or initiatives that might be leveraged further.

In contrast, other metrics like revenue, expenditure, and net income provide useful insights but do not directly quantify the performance in relation to the budget as effectively as variance does. Revenue signifies the total income earned, expenditure represents costs incurred, and net income reflects the profit after all expenses. While they are all important for overall financial health, they do not specifically track how well an organization is adhering to its budgeted expectations.