Practice: Variance Analysis & Performance Evaluation Quiz Quiz | Business Analysis & Reporting (BAR)

Question 1

What is the primary purpose of variance analysis?

Answer

Prepare financial statements

Answer

Compare actual results with planned or budgeted results to evaluate performance

Answer

Calculate tax liabilities

Answer

Determine market value of assets

Question 2

A favorable variance generally means:

Answer

Actual results improve profitability relative to the budget

Answer

Actual results are always higher than budgeted amounts

Answer

The budget was prepared incorrectly

Answer

Management performed poorly

Question 3

An unfavorable variance indicates that:

Answer

The company should immediately reduce staff

Answer

Management should ignore the variance

Answer

The budget must be revised

Answer

Actual results reduced profitability or were worse than planned

Practice Quiz