A favorable cost variance occurs when a. actual costs are more than standard costs b. standard costs are more than actual costs c. actual costs are the same as standard costs d. standard costs are less than actual costs

Question

Kaydence Michael

Business

19 February, 10:49

A favorable cost variance occurs when a. actual costs are more than standard costs b. standard costs are more than actual costs c. actual costs are the same as standard costs d. standard costs are less than actual costs

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Answers (1)

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Johnathon Hunter · Answer 1

b. standard costs are more than actual costs

Explanation:

There are mainly two types of cost variance.

1. Favorable variance

2. Unfavorable variance

When the standard cost is more than the actual cost then it said to be favorable variance. And when the standard cost is less than the actual cost then it said to be unfavorable variance which can impact the cost overall

So the correct option is b.