operating results with a static budget prepared at the beginning of the year. When actual sales are less than budget, would the restaurant usually report favourable variances on variable food
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Ribbs Restaurant compares monthly operating results with a static budget prepared at the beginning of the year. When actual sales are less than budget, would the restaurant usually report favourable variances on variable food costs and fixed supervisory salaries?
Food Costs | Supervisory Salaries | |
A | Yes | No |
B | Yes | Yes |
C | No | Yes |
D | No | No |
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