ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Marketing expenditure lower than the budget.
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Raw material cost lower than the budget.
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Gross profit margin higher than the budget.
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Sales revenue lower than the budget..
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Detailed explanation-1: -Adverse variances are those variances that are unfavourable to the firm. Examples would be sales below plan; costs above budget, cash receipts lower than expected, and overtime payment more than forecast.
Detailed explanation-2: -An adverse variance is where actual income is less than budget, or actual expenditure is more than budget. This is the same as a deficit where expenditure exceeds the available income. A favourable variance is where actual income is more than budget, or actual expenditure is less than budget.
Detailed explanation-3: -Cost Variance (CV) Cost Variance indicates how much over or under budget the project is in terms of percentage.
Detailed explanation-4: -Sales Volume Variance. Selling Price Variance. Sales Mix Variance. 04-Feb-2023