ECONOMICS

Detailed explanation-1: -Explanation: The real cost of material cost, direct labor, and administration to produce a unit of product is known as actual cost. Variance is the difference between the actual and standard costs. If the actual cost is higher than the standard cost, the variance is unfavorable.

Detailed explanation-2: -When the actual cost differs from the standard cost, it is called variance. If the actual cost is less than the standard cost or the actual profit is higher than the standard profit, it is called favorable variance.

Detailed explanation-3: -1. Standard costs are the estimated costs of labour, material, and other costs of production. Actual Costs, on the other hand, are those realized during the period and compared at the end of the period. This difference between the standard cost vs actual cost is termed as Variance.

Detailed explanation-4: -Answer and Explanation: Option (D) is the correct answer. Standard cost is used as the tool for measuring efficiency for controlling the cost of production.