Answer:
Variance is the difference between a Budgeted Amount and the Actual Amount. In terms of expenses, if the Budgeted amount is more than the Actual amount, the variance is Favorable because less was spent than was supposed to be spent.
The reverse is true.
Variance = Budgeted Amount - Actual amount
= 255 - 225
= $30
Percentage = Variance / Budgeted amount
= 30/255
= 11.76%
The variance is FAVORABLE because the actual amount was less than the budgeted amount.
