How is the forecast/total quota variance calculated for a sales representative?

The calculation of forecast/total quota variance for a sales representative is primarily concerned with understanding how the projected sales (forecast) compares to the set expectations (quota).

The calculation of the variance typically looks at how well the actual performance aligns with expectations. The correct method involves taking the quota amount and subtracting the forecast amount. This provides insight into whether the sales representative is on track to meet their quota based on their forecasted sales.

Calculating the variance using the forecast sum divided by the quota would give a ratio or percentage, rather than an absolute figure of variance, which is not the standard method for evaluating sales performance against target quotas. Variance is generally expressed in terms of how much the forecast exceeds or falls short of the quota, making the direct subtraction of the forecast from the quota a more appropriate choice to derive the variance figure.

This approach helps businesses track performance effectively, indicating whether sales efforts align with measurable targets and identifying areas where improvement may be needed.