Which of the Following Is True Regarding Variances

question 128

Multiple Choice

Which of the following is true regarding variances?

• A) Unfavorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
• B) Favorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
• C) Unfavorable variances are always credits.
• D) Favorable variances are always debits.
• E) None of these.

---

Definitions:

Net Operating Income

The profit a company generates from its operations, excluding taxes and interest.

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor.

Cost of Goods Manufactured

The total cost incurred by a company to produce goods in a specific period, including materials, labor, and overhead costs.

Accounting Records

Documentation and books that capture all financial transactions of a business, company, or individual, providing a basis for financial statements and audits.