Final answer:
The variance is unfavorable when a firm spends more on an item than is budgeted. The correct answer is option A.
Step-by-step explanation:
The correct answer is A) Unfavorable.
An unfavorable variance occurs when a firm spends more on an item than is budgeted. This means that the actual cost of the item is higher than what was expected or planned. It indicates a deviation from the budgeted amount, which can have negative implications for the financial performance of the firm.
For example, if a firm budgeted $100 for a particular item but ended up spending $120, the variance would be an unfavorable variance of $20.