Define 'Adverse Variance'.

If actual costs are LOWER than budgeted costs, is this Adverse or Favourable?

Define 'Favourable Variance'.

If actual revenue is HIGHER than budgeted revenue, is this Adverse or Favourable?

State TWO types of cost variance that a manufacturing business might calculate.

A business budgeted sales revenue of $50,000. Actual sales revenue was $45,000. Calculate the sales variance and identify whether it is Adverse or Favourable.

A business budgeted rent costs of $10,000. Actual rent costs were $12,000. Calculate the rent variance and identify whether it is Adverse or Favourable.

Study the data below: Budgeted labour costs: $25,000 Actual labour costs: $23,500 Calculate the labour variance and identify whether it is Adverse or Favourable.

A restaurant budgeted the following for March: Revenue: $80,000 Food costs: $32,000 Labour costs: $28,000 Actual figures for March were: Revenue: $85,000 Food costs: $34,000 Labour costs: $26,000 Calculate the variance for EACH item and identify whether Adverse or Favourable.

A manufacturing business budgeted material costs of $15,000 to produce 5,000 units (cost per unit: $3.00). Actual material costs were $16,500 to produce 5,500 units. Calculate: (a) The actual cost per unit (b) The total material variance (c) Identify whether the variance is Adverse or Favourable

Analyse TWO possible causes of an adverse labour cost variance in a manufacturing business.

Analyse TWO possible causes of a favourable material cost variance in a retail business.

Analyse why a business might experience BOTH an adverse sales revenue variance AND a favourable material cost variance in the same period.

Analyse TWO reasons why a hotel business might experience an adverse revenue variance during peak tourist season when occupancy rates are high.

Analyse why variance analysis might be MORE important for a small business than a large corporation.