Variance analysis

Question 1

What is variance?

Answer 1

The difference between the budgeted figure and the actual figure.

Question 2

What do favourable variances cause the actual cost to be?

Answer 2

IT causes the actual cost to be less than the standard cost

Question 3

What do adverse variances cause the actual cost to be?

Answer 3

It causes the actual cost to be more than the standard cost.

Question 4

If the price per unit of materials is lower than budgeted what type of variance is this?

Answer 4

FAV variance

Question 5

If the quantity of materials used is higher than budgeted what type of variance is this?

Answer 5

ADV variance

Question 6

What do favourable variances cause the actual revenue to be?

Answer 6

Higher than budgeted revenue

Question 7

What do adverse variances cause the actual revenue to be?

Answer 7

Less than budgeted revenue

Question 8

If the selling price is higher than budgeted what type of variance is this?

Answer 8

FAV variance

Question 9

If the quantity of goods sold is lower than budgeted what type of variance is it?

Answer 9

ADV variance