ECONOMICS

Detailed explanation-1: -Adverse and Favourable Variances A favourable variance is where actual income is more than budget, or actual expenditure is less than budget. This is the same as a surplus where expenditure is less than the available income.

Detailed explanation-2: -When revenue is higher than the budget or the actual expenses are less than the budget, this is considered a favorable variance. Unfavorable variances refer to instances when costs are higher than your budget estimated they would be.

Detailed explanation-3: -a)Favorable variances are variances that cause operating income to be higher than budgeted.

Detailed explanation-4: -A favorable variance reflects a decrease in operating income. A variance is the difference between an actual amount and the budgeted amount. In a standard costing system, each input of direct materials, direct labor, and manufacturing overhead has a cost standard and an efficiency standard.