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What difference between a favorable variance and an unfavorable variance?
Favourable variance is that variance which is good for business while unfavourable variance is bad for business
Can additive variance have a negative value?
No. Variance is always positive and so the sum of variances must also be positive.
The difference between variance and standard deviation?
The SD is the (positive) square root of the variance.
A favorable fixed overhead volume variance occurs if?
Favourable fixed overhead variance occurs when actual fixed cost is less than the budgeted fixed overhead expenses.
Why a favorable fixed overhead expenditure variance might be reported?
The price variance might result from use of cheaper but inferior quality materials hence though it will be cheaper , the final product will be compromised .
When would a variance be labeled as favorable?
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What is favourable variance?
A favorable variance is the difference between the budgeted or standard cost and the actual cost. If the actual cost is less than budgeted or standard cost, it is a favorable variance.
What difference between a favorable variance and an unfavorable variance?
Favourable variance is that variance which is good for business while unfavourable variance is bad for business
What does a favorable direct materials efficiency variance indicate?
A favorable direct materials efficiency variance indicates that you are using less material in production than was budgeted for.
Why would a favorable price variance for material might be the cause of unfavorable quantity variance?
A favorable/unfavorable price variance does not effect your quantity variance. The reason you would see a favorable price variance and an unfavorable quantity variance is because you consumed more materials than your standard allows AND the price you paid for those material was less than your standard price. If you paid more than your standard price, you would have experienced an unfavorable variance in both quantity and price.
What is favourable?
A favorable variance is the difference between the budgeted or standard cost and the actual cost. If the actual cost is less than budgeted or standard cost, it is a favorable variance.
Can additive variance have a negative value?
No. Variance is always positive and so the sum of variances must also be positive.
The difference between variance and standard deviation?
The SD is the (positive) square root of the variance.
If the controllable overhead variance is favorable the overhead volume variance?
volume variance relates to Fixed cost absorption, where as controllable variances arise due difference in actual variable spending per activity measure.
A favorable fixed overhead volume variance occurs if?
Favourable fixed overhead variance occurs when actual fixed cost is less than the budgeted fixed overhead expenses.
Why a favorable direct materials price variance might be of concern?
A favorable direct materials price variance may be the result of the purchase of cheaper materials that may be of inferior quality, thereby causing an inferior product. An inferior quality can also cause more spoilage and waste.
What is a positive or negative variance of a budget?
A variance is the difference between the projected budget and the actual performance for a particular account. A negative variance means that the budgeted amount was greater than the actual amount spent. A positive variance means that the budgeted amount was less than the actual amount spent. Note there is some debate over whether a negative variance means an underrun or an overrun. The Project Management Institute, however, endorses the accepted convention that a negative variance is a bad thing, and a positive variance a good thing.
