Which of the following is true regarding variances?
A) Unfavorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
B) Favorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
C) Unfavorable variances are always credits.
D) Favorable variances are always debits.
E) None of these.

Question

Quizplus · Accepted Answer

Unfavorable variances occur when actual costs exceed standard costs, so actual prices or usage being greater than standard prices or usage would result in an unfavorable variance. B is incorrect because actual prices or usage being less than standard prices or usage would result in a favorable variance. C and D are incorrect because whether a variance is favorable or unfavorable has nothing to do with whether it is a debit or credit.

Which of the Following Is True Regarding Variances