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:

Depreciation Expense

A non-cash expense recorded on the income statement, reflecting the gradual reduction of an asset's value over its useful life.

Net Loss

When expenses total more than revenue, the result is net loss.

Supplies on Hand

An accounting term representing the total value of the physical goods, materials, and supplies a company possesses that have not been used yet.

Net Cash Flow

The difference between a company's cash inflows and outflows within a specified period.