In Order for a Cost to Be Variable It Must

question 147

True/False

In order for a cost to be variable it must vary with either units produced or units sold.

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Definitions:

Cost Variance

The difference between the actual cost incurred and the expected cost, based on standard costing or budgeted amounts.

Standard Cost

A predetermined cost of manufacturing a single unit or a number of units of a product, which is used for budgetary and cost control purposes.

Favorable Variance

Occurs when actual performance is better than expected, leading to lower costs or higher revenues than planned.

Budgeted Revenue

The projected income that a business or organization expects to generate within a specific period, often used for planning and performance evaluation.