At the end of 2019, Dubai Mission prepared its master budget for 2020. Selected amounts from that budget, along with actual results for 2020, are presented below: $$\begin{array} { l r r }
& \underline { \text { Budgeted } } & \underline { \text { Actual } } \
\text { Sales } & \$ 180,000 & \$ 210,000 \
\text { Research and development cost } & 25,000 & 20,000 \
\text { Interest revenue } & 7,600 & 7,000 \
\text { Cost of goods sold } & 60,000 & 65,000 \
\text { Marketing costs } & 45,000 & 45,000
\end{array}$$ Which items in the table have favourable variances?

Question

At the end of 2019, Dubai Mission prepared its master budget for 2020. Selected amounts from that budget, along with actual results for 2020, are presented below: $$\begin{array} { l r r } 
& \underline { \text { Budgeted } } & \underline { \text { Actual } } \
\text { Sales } & \$ 180,000 & \$ 210,000 \
\text { Research and development cost } & 25,000 & 20,000 \
\text { Interest revenue } & 7,600 & 7,000 \
\text { Cost of goods sold } & 60,000 & 65,000 \
\text { Marketing costs } & 45,000 & 45,000
\end{array}$$ Which items in the table have favourable variances?

Quizplus · Accepted Answer

Favourable variances occur when actual revenues are higher than budgeted or when actual expenses are lower than budgeted. In this case, Sales exceeded the budget, and Research and Development costs were lower than budgeted, both of which are favourable variances.

At the End of 2019, Dubai Mission Prepared Its Master