Which type of variance causes operating income to be lower than the budgeted operating​ income?

A) Favorable variance

B) Neutral variance

C) Reverse variance

D) Unfavorable variance

Answer: Which type of variance causes operating income to be lower than the budgeted operating income? A. Favorable variance.

Explanation: A favorable variance happens when the actual revenues are larger than what was budgeted or the normal revenue earned. A favorable variance is a positive occurrence whereas an unfavorable variance is a negative occurrence. Having revenues over the expected amount means the business earned more in income than expected.