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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


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 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 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.


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.


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 causes a favorable budget variance?

A favorable budget variance occurs when actual revenues exceed budgeted revenues or actual expenses are less than budgeted expenses. This can result from higher-than-expected sales, cost-saving measures, efficient resource management, or unexpected income sources. Additionally, accurate forecasting and effective financial planning can contribute to achieving a favorable variance. Overall, it reflects better financial performance than anticipated.


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 .


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.

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