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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
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 unfavorable variance investigation?
Unfavorable variance investigation is the process of analyzing discrepancies between expected financial performance and actual results that lead to higher costs or lower revenues than planned. This investigation aims to identify the root causes of these variances, such as inefficiencies, unexpected expenses, or market changes, enabling organizations to implement corrective actions. By understanding the factors contributing to unfavorable variances, businesses can improve their budgeting processes and operational efficiencies. Ultimately, it helps in better financial control and decision-making.
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.
What is favorable and unfavorable budget variance?
A favorable budget variance occurs when actual financial performance exceeds budgeted expectations, typically leading to higher revenues or lower expenses than planned. Conversely, an unfavorable budget variance arises when actual performance falls short of budgeted projections, resulting in lower revenues or higher expenses. Both types of variances are important for financial analysis, as they help organizations assess their operational efficiency and make necessary adjustments for future budgeting. Understanding these variances aids in strategic decision-making and resource allocation.
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 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
When would a variance be labeled as favorable?
a
What type of variance is excess usage?
Since actual usage of the direct material was greater than the standard allowed, the excess usage is called an unfavorable variance
An unfavorable material quantity variance indicates?
actual usage of materials exceeds the standard material allowed for output
What does an unfavorable direct labor price variance indicate?
Unfavorrable direct labor price variance indicates that business has incurred more direct labor cost for production of units of product then standard labor cost. For example if standard cost of direct labor for producing 1 unit is 10 and company incurred 105 for making 10 units then extra 5 is unfavorable direct labor cost 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.
The activity variance for revenue is unfavorable if the actual revenue for the period is less than the revenue in the static planning budget true or false?
true
An unfavorable activity variance for a cost indicates that spending was higher than it should have been for the actual level of activity for the period true or false?
False
A revenue variance is unfavorable if the actual revenue is less than what the revenue should have been for the actual level of activity for the period true or false?
TRUE
What is cost price variances?
Price variance is the actual unit cost minus the standard unit cost, multiplied by the actual quantity purchased. The variance is said to be unfavorable if the actual price of the materials is higher than the standard price of the materials.
What is unfavorable variance investigation?
Unfavorable variance investigation is the process of analyzing discrepancies between expected financial performance and actual results that lead to higher costs or lower revenues than planned. This investigation aims to identify the root causes of these variances, such as inefficiencies, unexpected expenses, or market changes, enabling organizations to implement corrective actions. By understanding the factors contributing to unfavorable variances, businesses can improve their budgeting processes and operational efficiencies. Ultimately, it helps in better financial control and decision-making.
