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Would an adverse variance increase or decrease profit?

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Question ajoutée par Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date de publication: 2016/04/21
mohammed shahnawaz ahmed
par mohammed shahnawaz ahmed , Financial analyst , JP FINANCIAL AND INVESTMENT SERVICES

This depends on the scenario.For example:If there is an unfavourable material price variance caused by the purchase of higher quality materials,it may lead to favorble direct labour variance which may increase or decrease profit..This question cannot be answered in yes or no because it depends on the scenario we will be dealing with.

Wasim khan wazir
par Wasim khan wazir , Finance Specialist , Mott Macdonald

Adverse variance mean actual cost exceeded budgeted cost.   Most of time adverse variance decrease profit of the company. But its not always necessary in case when actual revenue exceed budgeted revenues

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