In one sentenceA variance that lowers profit below the estimate: actual revenue lower than the budget, or actual cost higher than the budget or standard.
Simply put
For revenue, it is unfavorable if the actual is below the estimate, and for costs if the actual exceeds the estimate.
It is also called an “adverse” or “negative” variance, and is marked with the letter U in English reports. It is a signal to look for the cause, not a final verdict on an employee's performance.
Worked example
A contracting business estimated equipment maintenance for the quarter at 10,000 SAR and actually spent 12,500 SAR.
Actual maintenance12,500 SAR
Estimated maintenance10,000 SAR
Difference12,500 − 10,000 = 2,500 SAR
Variance (cost above the estimate)2,500 SAR unfavorable
Don't confuse it with
Favorable varianceIts opposite: it raises profit, meaning more revenue or less cost than estimated.