Question

QUESTION 45 - Practical Activity The following is a typical Variance Report. Complete the table, analyse the results and comment on the variance report.

please answer all the questions... thank you :)

please ignore question 46

Answer 1

Variance: Product A- Budget-Actual

= 100,000-140,000

=-40,000

Varinace % = -40,000/100,000*100

= -40%

It can be assumed as:

Budgeted: 30,000

Actual: 33,000

For wages, it can be done same as product A.

For rent, there will be no variance as budgeted and actual are the same.

For marketing:

Budget-Actual =Variance

15,000- Actual= -5,000

15,000+5,000 =Actual

20,000= Actual

Varinace %= -5,000/15,000*100

= -33.33%

Telephone and sundry can be done in the same way as marketing.

For office equipment,there will be nothing as budgeted and actual are the same.

For total and profit, just sum everything up and you'll get your answer.

The budget variance is favorable when the actual revenue is higher than the budget or when the actual expense is less than the budget.

A favorable budget variance refers to positive variances or gains; an unfavorable budget variance describes negative variance, meaning losses and shortfalls. Budget variances occur because forecasters are unable to predict the future costs and revenue with complete accuracy