VARIANCE ANALYSIS
PRACTICE EXAM 2026-
VERSION WITH
QUALITY QUESTIONS
AND QUALIFIED
ANSWERS WITH
RATIONALES AND PDF
DOWNLOAD.
,1. What is variance analysis?
Comparison of actual vs budgeted
performance
It identifies deviations for control
purposes.
2. Favorable variance means:
Actual better than budget
Costs lower or revenues higher than
expected.
3. Unfavorable variance means:
Actual worse than budget
Costs higher or revenues lower than
expected.
4. Direct material price variance
formula uses:
, Actual price − Standard price
Measures cost per unit differences.
5. Direct material quantity variance
measures:
Efficiency of material usage
Compares actual vs standard
quantity.
6. Labor rate variance measures:
Pay rate differences
Actual vs standard wage rates.
7. Labor efficiency variance
measures:
Time used vs standard time
Reflects productivity differences.
, 8. Flexible budget adjusts for:
Actual activity level
Removes volume distortion.
9. Static budget is based on:
One fixed activity level
Does not adjust for output changes.
10. Sales volume variance relates to:
Difference in units sold
Compares actual vs budgeted sales.
11. Sales price variance measures:
Difference in selling price
Actual vs expected price per unit.
12. Variable overhead spending
variance:
PRACTICE EXAM 2026-
VERSION WITH
QUALITY QUESTIONS
AND QUALIFIED
ANSWERS WITH
RATIONALES AND PDF
DOWNLOAD.
,1. What is variance analysis?
Comparison of actual vs budgeted
performance
It identifies deviations for control
purposes.
2. Favorable variance means:
Actual better than budget
Costs lower or revenues higher than
expected.
3. Unfavorable variance means:
Actual worse than budget
Costs higher or revenues lower than
expected.
4. Direct material price variance
formula uses:
, Actual price − Standard price
Measures cost per unit differences.
5. Direct material quantity variance
measures:
Efficiency of material usage
Compares actual vs standard
quantity.
6. Labor rate variance measures:
Pay rate differences
Actual vs standard wage rates.
7. Labor efficiency variance
measures:
Time used vs standard time
Reflects productivity differences.
, 8. Flexible budget adjusts for:
Actual activity level
Removes volume distortion.
9. Static budget is based on:
One fixed activity level
Does not adjust for output changes.
10. Sales volume variance relates to:
Difference in units sold
Compares actual vs budgeted sales.
11. Sales price variance measures:
Difference in selling price
Actual vs expected price per unit.
12. Variable overhead spending
variance:
