Which of the Following Is a True Statement

question 7

Multiple Choice

Which of the following is a true statement?

• A) When actual price is greater than expected price, a favorable variance results
• B) When expected price is greater than actual price, a favorable variance results
• C) When expected price is equal to actual price, a favorable variance results
• D) None of these are true statements

---

Definitions:

Ideal Standards

Benchmarks for performance or production that assume perfect efficiency and effectiveness, often used for planning purposes.

Favorable Variances

Differences between expected and actual financial performance that result in better-than-expected profitability or cost savings.

Standard Costs

Represents the expected cost of producing or purchasing items, used for budgeting and cost control purposes.

General Ledger

A ledger that contains all asset, liability, and owner’s equity accounts.