Variances

Question 1

In which circumstances should an original budget be revised?

Answer 1

1. poor planning

2. uncontrollable factors

Question 2

What is compared in a planning variance?

Answer 2

Original budget vs revised budget

Question 3

Define planning variance

Answer 3

A classification of variances caused by initial assumptions in budget allowances being incorrect, hence the need to revise the budget

Question 4

In which circumstances should you not revise the budget?

Answer 4

For any operational issues, and the whole purpose of variance analysis is to identify these

Question 5

What is compared in an operational variance?

Answer 5

Revised budget vs Actual results

Question 6

Define operational variances

Answer 6

A classification of variances in which non-standard performance is defined as differing from the revised standard.