Budget Variances Quiz

What is a budget variance?

• A difference between actual and budget

• A difference between sales and costs

• A difference between management and employees

• A difference between revenue and profit

What is the term for variances where actual figures turn out to be better than the budget?

• Favorable variances

• Positive variances

• Unfavorable variances

• Adverse variances

What is the calculation for variance?

• Addition

• Multiplication

• Division

• Subtraction

In the given example, what type of variance is the difference in gross profit of £10,000 compared with the budget?

• Favorable variance

• Adverse variance

• Positive variance

• Negative variance

What is the term for variances where actual results are worse than expected?

• Adverse variances

• Positive variances

• Favorable variances

• Unfavorable variances

In the given example, what is the variance for actual overheads of £20 compared with the budget of £15?

• Adverse variance of 5

• Adverse variance of 10

• Favorable variance of 5

• Favorable variance of 10

What causes favorable variances in a business?

• Costs being higher than expected

• Sales being lower than budget

• Business operating more efficiently

• Budget holders overspending

What is the term for variances that often happen when budgeting costs?

• Positive variances

• Pessimistic variances

• Optimistic variances

• Adverse variances

What is the term for variances that occur when a cost arises that was never budgeted?

• Unexpected variances

• Adverse variances

• Overspending variances

• Optimistic variances

What is the main purpose of variance analysis?

• To prepare individual budgets

• To control the financial plan of a business

• To investigate differences between actual and budget

• To calculate budget variances