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What factors causes Budget Variance?

There are 7 variances associated with a budget ( which are generally calculated for controlling purposes) 1- Material Price variance 2- Material Quantity variance 3- Labor rate variance 4- Labor efficiency variance 5- Spending variance 6- Efficiency variance 7- Capacity variance


What is budget variance?

A budget "variance" is the difference between planned and actual performance.


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


Is a positive variance always favorable?

A positive variance is not always favorable; it depends on the context. In financial terms, a positive variance in revenue indicates better-than-expected performance, which is favorable. However, a positive variance in expenses could mean costs are higher than budgeted, which is unfavorable. Thus, assessing whether a positive variance is favorable requires understanding the specific metrics and their implications.


What is the static-budget variance of operating income?

The static-budget variance of operating income is the difference between the actual operating income and the budgeted operating income based on the original static budget. This variance helps businesses assess their performance by highlighting discrepancies caused by factors such as changes in sales volume, costs, or efficiency. A favorable variance indicates better-than-expected performance, while an unfavorable variance signals potential issues that may need to be addressed. Analyzing this variance allows management to make informed decisions for future budgeting and operational strategies.

Related Questions

What factors causes Budget Variance?

There are 7 variances associated with a budget ( which are generally calculated for controlling purposes) 1- Material Price variance 2- Material Quantity variance 3- Labor rate variance 4- Labor efficiency variance 5- Spending variance 6- Efficiency variance 7- Capacity variance


How do you calculate a budget variance as a percentage?

actual budget/budget = variance%


How do you calculate budget variance percentage?

Variance = 100*(Actual - Budget)/Budget


A favorable spending variance occurs when the actual cost is less than the amount of that cost in the flexible budget true or false?

True


How to calculate the Budget variance percentage?

how to calculate budget variance percentage?


Favorable materials quanity variance?

In cost accounting, a variance is the difference between what we expected to happen (what we planned for when we created the budget) and what actually happened. If we produce more units from a given quantity of raw material than we expected to produce when we set up the budget, we have a favorable materials quantity variance, because we produced the goods more efficiently than we had planned for. We have used the raw materials with less waste than expected.


When would a variance be labeled as favorable?

a


What is budget variance?

A budget "variance" is the difference between planned and actual performance.


What is a budget variance?

A budget "variance" is the difference between planned and actual performance.


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 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.


Is a positive variance always favorable?

A positive variance is not always favorable; it depends on the context. In financial terms, a positive variance in revenue indicates better-than-expected performance, which is favorable. However, a positive variance in expenses could mean costs are higher than budgeted, which is unfavorable. Thus, assessing whether a positive variance is favorable requires understanding the specific metrics and their implications.