Question

1 point What is a favorable variance? Actual Revenue \( < \) Budgeted Revenue Actual expense \( > \) Budgeted Expense Actual Revenue > Budgeted Revenue None of the choices are correct

1 point The fle

Answer 1

A favorable variance occurs when actual financial performance is better than planned; for example, when Actual Revenue is greater than Budgeted Revenue.

Step-by-step explanation:

A favorable variance refers to a situation where actual financial performance is better than the budgeted or planned performance. In terms of revenue and expense, a favorable variance would occur when the Actual Revenue is greater than the Budgeted Revenue, signifying that the business has earned more than expected. It can also occur when the Actual Expense is less than the Budgeted Expense, indicating that the business has spent less than it anticipated. Therefore, the correct choice is 'Actual Revenue > Budgeted Revenue' which represents a favorable variance situation for a company.

Answer 2

A favorable variance occurs when actual revenue is greater than budgeted revenue or actual expenses are less than budgeted expenses, indicating better-than-expected financial performance.

Step-by-step explanation:

A favorable variance refers to a situation in which actual results are better than the expected, or budgeted, results. Specifically, a favorable variance in terms of revenue occurs when Actual Revenue > Budgeted Revenue, meaning that the company has earned more money than planned. Similarly, a favorable variance in expenses happens when Actual Expense < Budgeted Expense, meaning the company has spent less money than it had projected in its budget. This concept is a critical aspect of financial analysis and budget management.