Which of the following statements is TRUE?
A)A favourable variance always benefits a company.
B)Managers attempt to maintain unfavourable variances.
C)Favourable variances are typically not preferred by management.
D)Only a flexible budget can be used to determine a variance.
E)A favourable variance is not always beneficial for an organization.

Question

Quizplus · Accepted Answer

A favourable variance means that the actual result exceeded the budgeted or expected result, which can be beneficial for an organization. However, sometimes a favourable variance may not be desirable, such as when it is caused by cutting corners or sacrificing quality to reduce costs. Therefore, a favourable variance is not always beneficial for an organization.

Which of the Following Statements Is TRUE