# Variance Analysis MCQs

A variance is the difference between a planned, budgeted or standard cost and the actual cost incurred. There is Cost variance analysis and Revenue

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## Variance Analysis MCQs

A variance is the difference between a planned, budgeted or standard cost and the actual cost incurred. There is Cost variance analysis and Revenue variance analysis. Variances are calculated for Cost and Management accounting purposes and to prepare a variance analysis report (operating statement) for management. Here on MCQs.club we have designed easy Multiple-Choice Questions (MCQs) which makes it easier to understand the variance analysis. Our MCQs cover the meaning/types/definition of variance analysis. There are Sales/Material/Labour/Overheads variances. Our designed MCQs are useful to Professional accounting exams and Competitive exams.

1. A variance is the difference between a planned, budgeted or standard cost and the actual cost incurred. The same comparisons may be made for revenues.
1. True
2. False
1. The process by which the total difference between standard and actual results is analysed is known as variance analysis.
1. False
2. True
1. Variances can be divided into:
1. Variable cost variances
2. Sales variances
4. All of the above
1. A cost variance is the difference between an actual cost and a standard cost.
• When actual cost is higher than standard cost, the cost variance is adverse (A) or unfavourable (U).
• When actual cost is less than standard cost, the cost variance is favourable (F).
1. The above is correct
2. The above is incorrect
1. Variances are calculated, relating to:
1. Direct materials, direct labour
3. Both A&B
4. None
1. In a cost accounting system, cost variances are adjustments to the profit in an accounting period.
• Favourable variances increase the reported profit.
• Adverse variances reduce the reported profit.
1. True
2. False
1. The method of calculating cost variances is similar for all variable production cost items (direct materials, direct labour and variable production overhead), while a different method of calculating cost variances is required for fixed production overhead.
1. The above statement is incorrect
2. The above statement is correct