In profit planning and budgeting,which statement is true concerning a favorable variance?
A)A favorable variance would increase operating profit,holding all other things constant.
B)A favorable variance is always positive (good),holding all other things constant.
C)A favorable variance would decrease operating profit,holding all other things constant.
D)A favorable variance is always negative (bad),holding all other things constant.

Question

Quizplus · Accepted Answer

A favorable variance refers to a deviation from the budget or expected value that has resulted in higher profit than anticipated. Therefore, it would increase operating profit, holding all other things constant. It does not have a fixed positive or negative value, as the actual result may still be below the targeted result.

In Profit Planning and Budgeting,which Statement Is True Concerning a Favorable