In one sentenceA variance that raises profit above the estimate: actual revenue higher than the budget, or actual cost lower than the budget or standard.
Simply put
For revenue, the variance is favorable if the actual exceeds the estimate. For costs, it is favorable if the actual is below the estimate.
Don't always celebrate it before you understand its cause: savings on materials may come from lower-quality materials, which later shows up as an unfavorable variance in waste or returns.
Worked example
A pharmacy estimated the cost of the month's purchases at 50,000 SAR, then got a discount from the supplier, so the actual cost was 46,000 SAR.
Estimated cost50,000 SAR
Actual cost46,000 SAR
Difference46,000 − 50,000 = −4,000 SAR
Variance (cost below the estimate)4,000 SAR favorable
Don't confuse it with
Unfavorable varianceIts opposite: it lowers profit, meaning less revenue or more cost than estimated.