Which of the following is not true of variances?
Material spending (total) variance = Price variance + Quantity variance.
Spending (total) variance = Actual cost – Standard cost
If a cost variance is negative, it is favorable.
(Price variance) X (Quantity variance) < 0
Answer : option C
Cost variances may be either positive or negative figures. Negative figures happen if you spend more on a project than you allowed in your budget. Positive figures result if you spend less on a project than the budget predicted. Negative cost variance figures are almost always a bad thing for a business, as companies cannot always guarantee they can come up with the funds to cover the excess cost. If a cost Variance is negative then it is unfavourable.
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