Which of the following is an incorrect statement regarding variances?

a. A variance can be both favorable and unfavorable.

b. A variance is favorable when expected sales are more than actual sales.

c. A variance is a difference between budgeted and actual amounts.

d. A variance can be calculated for both revenues and expenses.

Question

Buzz

Business

7 September, 07:19

Which of the following is an incorrect statement regarding variances?

a. A variance can be both favorable and unfavorable.

b. A variance is favorable when expected sales are more than actual sales.

c. A variance is a difference between budgeted and actual amounts.

d. A variance can be calculated for both revenues and expenses.

+5

Answers (1)

Know the Answer?

Greyson Santiago · Answer 1

The answer is B.

Explanation:

Variance is the difference between the expected sales (revenue), price, material quantity, material cost (expense) and the actual sales, price or material quantity.

Sometimes, expected or budgeted sales or price might be higher than actual sales or price, if this happens the variance is an unfavorable one.

And if it is the actual that is higher or more than the budgeted or expected sales or price, we say it is a favourable variance.