When Would a Variance Be Labeled as Unfavorable

question 97

Multiple Choice

When would a variance be labeled as unfavorable?

• A) When standard costs are more than actual costs
• B) When expected sales are less than actual sales
• C) When actual sales are equal to expected sales
• D) None of these answers is correct.

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Definitions:

Output Increases

A rise in the quantity of goods or services produced by a company or economy.

Law of Diminishing Returns

The principle that as the level of investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.

Marginal Cost

The cost of producing one additional unit of a good or service.

Average Total Cost

The total cost of production divided by the quantity produced, indicating the cost effectiveness of producing goods.