A favorable variance indicates that:a. budgeted costs are less than actual costsb. actual revenues exceed budgeted revenues. c. the actual amount decreased operating income relative to the budgeted amount. d. All of these answers are correct.

Answer: b. Actual revenue exceeds budgeted revenue.

Explanation: A favourable variance shows that a company was either able to make more revenue than they had expected according to their budgeted figures, or they incurred less costs than they had planned to make according to their set budget.

Using the multiple choice options given:

a. Budgeted costs are less than actual costs. Incorrect. This is unfavourable, as they actual incurred more costs than what they had budgeted for.

b. Actual revenues exceed budgeted. Correct. This is seen differently as costs. Although they generated more sales than what they budgeted for, this is a good thing as it indicates they made more money than what they initially thought they would. Which is good for the overall revenue of the company.

c. The actual amount decreased operating income relative to the budgeted amount. Incorrect. This is vague as it doesn't indicate what the 'actual amount' refers to: income or expenses. Also variances compares like items: actual costs to budgeted costs, and actual income to budgeted income, in order to identify what type of variance exists.

d. All of these answers answers are correct. Incorrect. Only b. Is correct. a. And c. Are incorrect.