alleryStart learning →A variance arises when performance does not match:
AThe headcount plan
BExpectations
CLast year's figure
DThe share price
Answer & Solution
Correct answer: B. Expectations
1. Variances are defined against an expectation.
2. A standard cost communicates what is expected.
3. When your performance does not match your expectations, a variance arises.
4. That variance is the gap between standard and actual.
_Source: OpenStax Principles of Accounting, Volume 2: Managerial Accounting (CC BY-NC-SA 4.0), Ch 8 'Standard Costs and Variances'_
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