ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A budget variance is an accounting term that describes instances where actual costs are either higher or lower than the standard or projected costs. An unfavorable, or negative, budget variance is indicative of a budget shortfall, which may occur because revenues miss or costs come in higher than anticipated.

Detailed explanation-2: -A positive variance means that actuals and encumbrances are less than the amount budgeted (good). A negative variance means the account is over spent (bad).

Detailed explanation-3: -What does favorable and unfavorable mean in accounting? In the field of accounting, variance simply refers to the difference between budgeted and actual figures. Higher revenues and lower expenses are referred to as favorable variances. Lower revenues and higher expenses are referred to as unfavorable variances.

Detailed explanation-4: -Budget variance equals the difference between the budgeted amount of expense or revenue, and the actual cost. Favourable or positive budget variance occurs when: Actual revenue is higher than the budgeted revenue. Actual expenses are lower than the budgeted expenses.

Detailed explanation-5: -A positive variance, also called favorable variance, is when actual revenue is higher than budgeted revenue and actual expenses are lower than budgeted expenses. These numbers normally work in concert with one another, but it is possible to have a positive variance on revenue with a negative variance on expenses.