Favorable variances have credit balances.They are contra-expenses and therefore decrease the expense Cost of Goods Sold.

Name: Favorable variances have credit balances.They are contra-expenses and therefore decrease the expense Cost of Goods Sold.
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Question

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Favorable variances represent a decrease in the cost of goods sold, which is an expense. However, since they are contra-expenses, they have a credit balance and serve to offset and ultimately reduce the overall expense.

Favorable Variances Have Credit Balances