Unfavorable Variance

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Unfavorable Variance

The actual costs of a project over and above the normal costs of a similar project. Companies try to avoid unfavorable variances by budgeting carefully.
References in periodicals archive ?
The profit center is at the intersection of the revenue and cost centers (Schoute, 2008); and it is responsible for balancing revenue, cost, and unfavorable variances for the unit it controls (Mojgan, 2012).
Cost accountants investigating the root causes of unfavorable variances often find that production people don't remember clearly the events that generated the data, hampering any investigation.
Offsetting the unfavorable variances was a $71 thousand decrease in taxes, other than income, which declined from $226 thousand for the three months ended March 31, 2015 to $155 thousand for the three months ended March 31, 2016.
Boards need to encourage discussion of unfavorable variances against plans.
Mike Regan, CEO and chairman of the board of freight audit and payment provider TranzAct Technologies, explained that with the rapid rise in the price of diesel, and the reality that carriers are asking for and getting higher rates, many shippers are finding that there are some "unfavorable variances" in their transportation budgets.
While most textbooks present these horizontally, I typically present them vertically, with the actual quantity and prices on top (using the same format as with the sales mix and quantity variances.) Because the calculations involve costs, positive differences reflect unfavorable variances, and negative differences reflect favorable variances.
He said the last two years have produced unfavorable variances in that area, and he said that may be the case again this fiscal year.
These weekly reports would likely show both favorable and unfavorable variances. One week's results might indicate only 82% OTD and the next week OTD might jump to 91%.
If warranted, immediate corrective action should be instituted for unfavorable variances.
1 What is said here in terms of unfavorable variances of course applies, mutatis mutandis, to cost savings which give rise to favorable variances.
For purposes of consistency, the convention of using brackets <> to denote unfavorable variances will be followed in this discussion.
Senior staff members analyze the reports at regularly scheduled meetings and act to correct any significantly unfavorable variances.