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.

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.

Parrain Parrain · Answer 2 · 2021-11-16T12:00:44+01:00

When it comes to variances, it is incorrect to say that b.A variance is favorable when expected sales are more than actual sales.

Variance:

Is the difference between a budgeted amount and the actual amount experienced
Can either be favorable or unfavorable
Can apply to revenues and expenses

When variances are applied to revenue, a favorable variance would be one where the budgeted sales would be less than the actual sales which means that the company had more sales than they expected.

In conclusion, it is incorrect to say that variance is favorable if expected sales are more than actual sales.

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