UK Accounting Glossary
The difference between a planned, budgeted or standard cost and the actual cost incurred. An adverse variance arises when the actual cost is greater than the standard cost. A favourable variance arises when the actual cost is less than the standard cost.
In standard costing and budgetary control, the variance is the difference between the standard or budgeted levels of cost (or income) of an activity and the actual costs incurred (or income achieved). If actual performance is better than standard then a favourable variable occurs, whilst conversely, if actual performance is worse, then there is adverse variance.
Adverse variances are usually subject to detailed analysis in order to pinpoint its exact cause(s).
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Variance are sourced/syndicated from:
This glossary post was last updated: 23rd December 2018.