If a revenue variance is favorable, what does that mean?

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Prepare for the WGU ACCT2350 Intro to Business Accounting Exam. Practice with multiple choice questions and detailed solutions to sharpen your accounting skills. Master your exam with confidence!

Multiple Choice

If a revenue variance is favorable, what does that mean?

Explanation:
A favorable revenue variance means the actual revenue came in higher than what was budgeted. Revenue variance is calculated as actual revenue minus budgeted revenue. When actual exceeds budget, the difference is positive, and higher revenue is better for the business, so it’s considered favorable. If actual revenue were less than budget, the variance would be negative (unfavorable); if they were the same, the variance would be zero.

A favorable revenue variance means the actual revenue came in higher than what was budgeted. Revenue variance is calculated as actual revenue minus budgeted revenue. When actual exceeds budget, the difference is positive, and higher revenue is better for the business, so it’s considered favorable. If actual revenue were less than budget, the variance would be negative (unfavorable); if they were the same, the variance would be zero.

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