ECONOMICS
BUDGETING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Variance
|
|
|
Adverse variance
|
|
|
Profit
|
|
|
Favorable variance
|
Detailed explanation-1: -The difference between the planned and actual numbers is variance, and it’s crucial to minimize it, especially if you’re a startup or small business. You can consider the difference between the budget amount and actuals as either favorable or unfavorable.
Detailed explanation-2: -actual variance analysis is a process businesses use to compare their planned or expected financial transactions to their actual results. A budget variance represents any difference between the budgeted amount and the actual outcome.
Detailed explanation-3: -The formula for dollar variance is even simpler. It’s equal to the actual result subtracted from the forecast number. If the units are dollars, this gives us the dollar variance. This formula can also work for the number of units or any other type of integer.