6. Define the flexible budget variance. What causes it? As the name suggests, the flexible budget variance is the difference between the flexible budget and the master budget . Since the actual results and the flexible budget are based on the same volume of output, this variance highlights unexpected revenues and expenses that are caused by factors other than volume . 7. Define the volume variance. What causes it? The volume variance is the difference between the master budget and the actual results . The only difference between these two budgets is the volume of units on which they are based . Therefore, the volume variance is caused by differences between actual and expected fixed costs .