What makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavorable variance involving labor. 2-How do you balance a firm’s need to succeed and the need for not asking the workers for perfection? 3-What two components are needed to determine a standard for materials? 4-What makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavorable variance involving labor.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
1-What makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavorable variance involving labor.
2-How do you balance a firm’s need to succeed and the need for not asking the workers for perfection?
3-What two components are needed to determine a standard for materials?
4-What makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavorable variance involving labor.
What makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavourable variance involving labor.
In accounting and finance, a variance refers to the difference between the actual results and the budgeted or expected results. A favorable variance is one in which the actual result exceeds the budgeted or expected result, while an unfavorable variance is one in which the actual result falls short of the budgeted or expected result.
An example of a favorable variance involving materials would be if a company's actual cost for materials was lower than the budgeted cost. For example, if a company budgeted $10,000 for materials and only spent $8,000, then there is a favorable variance of $2,000. This can be considered favorable because it means the company is able to produce the same amount of products or services while using fewer resources, which can improve profitability.
On the other hand, an example of an unfavorable variance involving labor would be if a company's actual labor cost was higher than the budgeted cost. For example, if a company budgeted $50,000 for labor but ended up spending $60,000, then there is an unfavorable variance of $10,000. This can be considered unfavorable because it means the company is not meeting its budgeted cost goals, which can result in reduced profitability or financial difficulties.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
