Consider the purchase of materials budgeted at $50,000 but actually only $45,000 was was spent resulting in a $5,000 favorable variance. What if the materials were supposed to be 3/4" plywood, but instead 1/2" plywood was purchased and used. Is that necessarily a good thing?

Or here's an exaggerated example. Suppose $250,000 is budgeted to carry out an advertising campaign. Instead -0- is spent so there's a $250,000 favorable variance. Would this be considered good?

Answer rating: 100% (QA)

Just looking at the dollar amounts or variances alone does not provide enough information to judge w... View the full answer