Final answer:
A spending variance is considered favorable if the actual cost is lower than the budgeted amount for a certain level of activity, reflecting good cost management.
Step-by-step explanation:
The spending variance is labeled as favorable when the actual cost is lower than what was budgeted for a given level of activity. This indicates that a company has spent less on expenses than what was initially planned, which can positively impact the profit. Favorable spending variances in business are typically associated with efficient cost management and can contribute to an improved financial performance of a company.