The consideration of decreased operating income relative to budgeted amount, in static budget is classified as ____________?
Correct answer: D. unfavorable varianceCompare Credit Cards
- A. revenue variance
- B. cost variance
- C. favorable variance
- D. unfavorable varianceCompare Credit Cards
Explanation
A decrease in operating income compared with the budget is unfavorable because the business earned less than planned. Favorable and unfavorable describe the effect on operating income, not merely whether revenue or cost changed.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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