ECONOMICS

Detailed explanation-1: -Standard costs should always be revised when they differ from actual costs. Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.-focus on correcting variances between standard costs and actual costs.

Detailed explanation-2: -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. On the contrary, if the actual cost is higher than the standard cost or profit is low, then it is called adverse variance.

Detailed explanation-3: -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-4: -Variance refers to the difference between the standard cost and the actual cost. Variance represents the amount of this difference between these two costs and may classified as favorable or unfavorable.