In some cases a favourable variance can be as bad or worse as an unfavourable variance

Question

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Direct materials standards and direct labour standards are set based on a combination of factors such as historical data, industry benchmarks, expected efficiency levels, and quality standards. The standards are usually set by a team of experts who analyze these factors and set specific targets for the quantity and cost of materials and labor required for a specific product or service. These standards serve as benchmarks for actual performance and are used to assess variances and make necessary adjustments.

In Some Cases a Favourable Variance Can Be as Bad