Cost and Management accounting MCQs
Introduction to costing and performance measurement MCQs
Classification of Cost MCQs
Accounting for Materials MCQs
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.
- 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.
- The process by which the total difference between standard and actual results is analysed is known as variance analysis.
- Variances can be divided into:
- Variable cost variances
- Sales variances
- Fixed production overhead variances
- All of the above
- 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).
- The above is correct
- The above is incorrect
- Variances are calculated, relating to:
- Direct materials, direct labour
- Variable production overhead and fixed production overhead
- Both A&B
- 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.
- 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.
- The above statement is incorrect
- The above statement is correct