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At the start of fiscal period every organisation prepares budgets for the coming period and then use the same estimated budget at the end of fiscal year to evaluate the performence in the fiscal year.

When actuall amount for any activity is utilized less then the budgeted amount estimated for the same activity at the start of the fiscal year and perform the same activity accurately as estimated at start of period with less amount then it is called favourable variance and vice versa.

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Q: What is the Difference between favourable and adverse variance?
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