Final answer:
A favorable variance refers to the difference between the actual result and the expected or budgeted result. It can be either positive or negative. A favorable variance is not always good and it decreases operating profits. Option C is correct.
Step-by-step explanation:
A favorable variance refers to the difference between the actual result and the expected or budgeted result. It can be either positive or negative. A positive or favorable variance means that the actual result is better than the expected or budgeted result, while a negative or unfavorable variance means that the actual result is worse than the expected or budgeted result.
A favorable variance is not always an indication of good performance. This is because a favorable variance could be the result of factors such as cost-cutting measures or luck rather than actual improvements in performance.
Therefore, options A and B are incorrect. Option C is correct as a favorable variance decreases operating profits. Option D is also correct as a favorable variance is not necessarily good.