A contractor compares the budget to actual results and finds materials cost $52,000 against a budgeted $45,000. This $7,000 difference is called a:
Explanation
The gap between a budgeted figure and the actual result is a budget variance, and spending $52,000 where $45,000 was planned is unfavourable because it takes $7,000 out of the planned profit. A favourable variance is the same measure with the sign the other way, where actual cost comes in under budget. Drawing down a contingency is how a budget absorbs such an overrun, not the name of the gap. And net profit is the bottom line of the whole period, not the difference on one line item.
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