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Variances are either favorable or unfavorable. A favorable variance occurs when net income is higher than originally expected or budgeted. For example, when actual expenses are lower than projected expenses, the variance is favorable. Likewise, if actual revenues are higher than expected, the variance is favorable.

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Definition: An unfavorable variance occurs when the difference between actual revenues and costs compared with the budgeted revenues and costs results in a lower net income. In other words, management’s budgeted and projected revenues and expenses resulted in a higher net income than the actual net income. What Does Unfavorable Variance Mean?

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Revenues might have went up because a few large unexpected sales came in. All of these things help produce a favorable variance in the budgeted forecast and the actual business performance. Unfavorable variances are just the opposite. An unfavorable variance is when a company forecasts for a certain amount of income and does reach it.

www.investopedia.com/terms/u/unfavorable-variance.asp

Example of Unfavorable Variance For example, if sales were budgeted to be $200,000 for a period but were actually $180,000, there would be an unfavorable (or negative) variance of $20,000, or 10%.

www.accountingtools.com/articles/what-is-an-unfavorable...

The concept of an unfavorable variance is used in exception reporting, where managers want to see only those unfavorable variances that exceed a certain minimum amount (such as, for example, at least 10% of the baseline and greater than $25,000). If an unfavorable variance exceeds the minimum, then it is reported to managers, who then take ...

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Each favorable and unfavorable variance needs to be examined individually, as noted in the popcorn example in the video! Analysis is the key to making sure that increases (favorable variances) in revenue or increases (unfavorable variances) in expenses are appropriate.

smallbusiness.chron.com/causes-unfavorable-laborprice...

Over time, labor costs can rise due to either periodic or contractual price increases, leading to unfavorable budgetary price variances. For example, long-term contracts will frequently have so ...

www.reference.com/business-finance/favorable-unfavorable...

A favorable variance is a state in which the revenue of something goes beyond its budget. When a variance is unfavorable, the revenue made is less than the budget. Favorable variances and unfavorable variances are usually expressed as negative and positive respectively. The first thing to look into is how any sudden changes have an effect.

www.accountingtools.com/articles/what-does-a-favorable...

The reporting of favorable (and unfavorable) variances is a key component of a command and control system, where the budget is the standard upon which performance is judged, and variances from that budget are either rewarded or penalized.

www.accountingcoach.com/blog/favorable-budget-variance

What is the meaning of a favorable budget variance? A favorable budget variance indicates that an actual result is better for the company (or other organization) than the amount that was budgeted.. Here are three examples of favorable budget variances: Actual revenues are more than the budgeted or planned revenues.; Actual expenses are less than the budget or plan.