The difference between what total sales should have been given the actual level of activity for the period and the actual total sales is a revenue variance.
Basically, a revenue variances is an accounting tool that is used to measure the difference between expected and actual sales. This information are often needed to determine the success of an organization's selling activities and the perceived attractiveness of its products. There are three types of revenue variances which can be used to develop insights into the reasons why actual sales differ from expectations, they include the Sales Volume Variance, Selling Price Variance and Sales Mix Variance.
Most time, the typical favorable revenue variance occurs when the actual revenues exceed budgeted revenues while the opposite is true for an unfavorable variance. Therefore, the revenue variance results from the differences between budgeted and actual selling prices, volumes or a combination of the two.
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