A(n) variance occurs when the company operates at a different capacity level than predicted.

The variance you're referring to is known as a "capacity variance". This occurs when a company's actual level of production differs from its expected level of production. Here are the steps to understand it:

1. Predicted Capacity Level: This is the level of production that a company expects to achieve within a certain period. It's usually based on historical data, market research, and other relevant factors.

2. Actual Capacity Level: This is the actual level of production that a company achieves within the same period. It's determined by the actual amount of goods or services produced.

3. Capacity Variance: This is the difference between the predicted and actual capacity levels. If the actual level is higher than the predicted level, the variance is positive (favorable). If the actual level is lower than the predicted level, the variance is negative (unfavorable).

4. Causes: Capacity variance can be caused by a variety of factors, including changes in demand, production inefficiencies, equipment breakdowns, and supply chain disruptions.

5. Impact: Capacity variance can have significant impacts on a company's financial performance. A positive variance can lead to higher revenues and profits, while a negative variance can lead to lower revenues and profits.

6. Management: Companies often try to manage capacity variance by improving their forecasting methods, increasing their operational efficiency, and developing contingency plans for potential disruptions.