Which of the following statements is(are)true?
(A)A favorable variance is not necessarily good,and an unfavorable variance is not necessarily bad.
(B)The master budget includes operating budgets (e.g. ,production budget)and financial budgets (e.g. ,cash budget).
A) Only A is true.
B) Only B is true.
C) Both A and B are true.
D) Neither A nor B is true.

Question

Which of the following statements is(are)true?
 (A)A favorable variance is not necessarily good,and an unfavorable variance is not necessarily bad.
(B)The master budget includes operating budgets (e.g. ,production budget)and financial budgets (e.g. ,cash budget).
A) Only A is true.
B) Only B is true.
C) Both A and B are true.
D) Neither A nor B is true.

Quizplus · Accepted Answer

A favorable variance could be the result of cutting corners or sacrificing quality, which may have negative consequences in the long run. Similarly, an unfavorable variance could be the result of investments made in the business to improve future performance. The master budget includes a combination of operating budgets and financial budgets to provide a comprehensive view of the company's projected operations and financial position.

Which of the Following Statements Is(are)true