A favorable variance indicates that ________.
A) budgeted costs are less than actual costs
B) actual revenues exceed budgeted revenues
C) actual operating income is less than the budgeted amount
D) budgeted contribution margin is more than the actual amount

Question

Quizplus · Accepted Answer

A favorable variance means that the actual result is better than the budgeted amount. In this case, actual revenues exceeding budgeted revenues is a favorable outcome. A is incorrect because it refers to a favorable expense variance, C is incorrect because it refers to an unfavorable operating income variance, and D is incorrect because it refers to an unfavorable contribution margin variance.

A Favorable Variance Indicates That ________