When Would a Variance Be Labeled as Favorable

question 107

Multiple Choice

When would a variance be labeled as favorable?

• A) When actual costs are less than standard costs
• B) When standard costs are equal to actual costs
• C) When standard costs are less than actual costs
• D) When estimated costs are greater than actual costs

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Definitions:

CPI

Consumer Price Index, a measure indicating the average price level of a basket of goods and services purchased by households, used to estimate inflation.

Base Year

A reference year against which economic or financial data is compared to measure economic performance or inflation.

Prices

Monetary values assigned to goods and services, which are determined by supply and demand dynamics in the market.

Misery Index

An economic indicator created by summing the unemployment rate and the inflation rate, intended to measure the health of an economy.