Which Type of Variance Causes Operating Income to Be Lower

question 34

Multiple Choice

Which type of variance causes operating income to be lower than the budgeted operating income?

• A)Favorable variance
• B)Neutral variance
• C)Unfavorable variance
• D)Reverse variance

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Definitions:

Assembly Department

A division within a manufacturing facility where parts are put together to assemble the final product.

Beginning Work

The inventory of production that has not yet been completed at the start of a financial or reporting period.

Process Inventory

The amount of inventory that is currently undergoing manufacturing or production processes.

Conversion Costs

The total cost of converting raw materials into finished goods, including both labor and manufacturing overhead expenses.