A favorable cost variance occurs when a. standard costs are less than actual costs b. actual costs are more than standard costs c. actual costs are the same as standard costs d. standard costs are more than actual costs

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Business

Xiomara Boone

3 November, 16:23

A favorable cost variance occurs when a. standard costs are less than actual costs b. actual costs are more than standard costs c. actual costs are the same as standard costs d. standard costs are more than actual costs

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Gavin · Answer 1

Standard costs are more than actual costs.

Explanation:

A cost variance is the difference that exists between the cost actually inccured and the budgeted amount of cost that should be incurred.

A favorable variance occurs when net income is higher than originally expected or budgeted income. For example, when the actual expenditure are lower than projected expenditure, the variance is said to be favorable.