A favorable cost variance of significant magnitude:
A) Is likely the result of exceptional planning.
B) May lead to future improvements in production.
C) Is strong evidence of excellent operating performance.
D) Indicates tight financial control.
E) Does not need to be investigated as to its underlying cause (because it is "favorable").

Question

Quizplus · Accepted Answer

A favorable cost variance may indicate areas where production processes can be improved, leading to future efficiencies. However, it should still be investigated to understand the underlying causes.

A Favorable Cost Variance of Significant Magnitude