Adverse variances means unfavourable variance which is actual expenses are more than budgted variance.
Incurring higher fixed costs than were planned for in the budget can cause adverse overhead capacity variance. Other caused can include planning errors, inefficient management of fixed overheads, and business expansion that was not added to the budget.
Favourable variance is that variance which is good for business while unfavourable variance is bad for business
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
Equal in Variance
Adverse variances means unfavourable variance which is actual expenses are more than budgted variance.
adverse variance
Incurring higher fixed costs than were planned for in the budget can cause adverse overhead capacity variance. Other caused can include planning errors, inefficient management of fixed overheads, and business expansion that was not added to the budget.
There are a number of reasons for causinf DM Price Variance. Adverse Price Variance 1) Demand > Supply (Low Supply, High Demand result in price to be material purchase to be more costly) 2) Change to a higher grade material quality. 3) Purchases made from oversea, exchange rate incurred 4) Purchases made in smaller quantity As for favourable DM price variance, explanation will be opposite of the above given.
Favourable variance is that variance which is good for business while unfavourable variance is bad for business
Negative price variance is when the cost is less than budgeted. Volume variance is a variance in the volume produce.
efficiency variance, spending variance, production volume variance, variable and fixed components
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
Variance
Unequal in Variance
Equal in Variance
Since Variance is the average of the squared distanced from the mean, Variance must be a non negative number.