Question

PLEASE HELP PERSONAL FINANCE / LAUNCH QUESTION

A person budget $40 for entertainment but spend $50. What is the percent of variance?


a. 25% favorable


b. 20% unfavorable


c. 20% favorable


d. 25% unfavorable

Answer 1

option d: 25% unfavorable

Explanation:

The budget is $40, and it was spent $50, so as the amount spent was higher than the budget, we have a unfavorable percent of variance.

The amount spent more than the budget was:

50 - 40 = 10

Now to calculate the percent of variance, we divide the value spent more than the budget (10) by the value of the budget (40)

Percent of variance = 10 / 40 = 0.25 = 25%

So the answer is 25% unfavorable, option d