An Example of a Favorable Variance Is ________

question 50

Multiple Choice

An example of a favorable variance is ________.

• A) actual revenues are less than expected revenues
• B) actual expenses are less than expected expenses
• C) actual material prices are greater than expected material prices
• D) expected labor costs are less than actual labor costs

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Definitions:

Normal Return

The minimum profit necessary for a company to remain in business, often equated to covering opportunity costs.

Total Fixed Costs

The sum of all costs required to produce any output, assuming they remain constant regardless of the level of production.

Fixed Costs

are expenses that do not change in response to the level of goods or services produced by a business, like rent or salaries.

Variable Costs

Expenses that change in proportion to the production or sales figures.