When actual performance is worse than budgeted performance, what is it called?

The situation where actual performance is worse than budgeted performance is referred to as an unfavorable variance. This term is used in financial and operational contexts to indicate that expenses are higher than planned or that revenues are lower than expected. Unfavorable variances highlight discrepancies that may signal the need for corrective action or analysis to understand the reasons behind the poor performance.

Favorable variance suggests that actual performance exceeded budget expectations, which is not applicable in this scenario. Terms like severe and marginal variance are not standard financial terminology used to describe negative performance compared to budgets. Therefore, unfavorable variance accurately captures the essence of a situation where performance falls short of expectations.