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Which type of variance causes operating income to be lower than the budgeted operating​ income?

A) Favorable variance
B) Neutral variance
C) Reverse variance
D) Unfavorable variance

1 Answer

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Answer: Which type of variance causes operating income to be lower than the budgeted operating income? A. Favorable variance.

Explanation: A favorable variance happens when the actual revenues are larger than what was budgeted or the normal revenue earned. A favorable variance is a positive occurrence whereas an unfavorable variance is a negative occurrence. Having revenues over the expected amount means the business earned more in income than expected.

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