Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.

Question

Quizplus · Accepted Answer

This is a correct statement. When calculating variances, favorable variances (such as when actual costs are lower than expected) are often offset by unfavorable variances (such as when actual costs are higher than expected). By subtracting these variances from each other, we can determine a net favorable or unfavorable variance.

Favorable and Unfavorable Variances Are Subtracted from Each Other to Arrive