The production budget is typically prepared prior to the sales budget. Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known. If activity is higher than expected, total variable costs should be higher than expected. If activity is lower than expected, total variable costs should be lower than expected. A spending variance is the difference between how much a cost should have been, given the actual level of activity, and the actual amount of the cost for the period