Unfavorable variances arise when actual costs exceed estimated budget costs.

Question

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Unfavorable variances are always a result of actual costs exceeding estimated budget costs. This can be due to various factors such as cost overruns, inefficiencies, unexpected events, or errors in budget estimates. Identifying unfavorable variances and their causes is important in order to take corrective actions to bring the project or operation back on track.

Unfavorable Variances Arise When Actual Costs Exceed Estimated Budget Costs