In standard costing and budgetary control, adverse variance indicates discrepancies where actual performance falls short of budgeted expectations, impacting the budgeted profit negatively.
In absorption costing, the circumstance in which the absorbed overhead is less than the overhead costs incurred for a period. This adverse variance represents a reduction of the budgeted profits of the organization.
Unfavourable variance, also known as adverse variance, indicates that actual financial performance is worse than the budgeted expectation, resulting in lower profits or higher costs than anticipated.
Variance in standard costing and budgetary control refers to the difference between the standard or budgeted levels of cost or income for an activity and the actual costs incurred or income achieved.
