QUESTION 6The following variances are reported for a blood bank. If two variances are chosen for investigation, which of the following variances should be investigated? Actual Budget VarianceMedical Supplies $300 $500 $200 FResearch 850 1,000 150 FAdministration 480 300 180 UBlood Tests 2,400 2,000 400 U A.I and II B.II and III C.III and IV D.I and IV E.I and III

Reason: Administration and blood test variances are unfavorable in this situation. As a result, they…

Answered: The following variances are reported…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QUESTION 6

The following variances are reported for a blood bank. If two variances are chosen for investigation, which of the following variances should be investigated?

Actual Budget Variance
1. Medical Supplies $300 $500 $200 F
2. Research 850 1,000 150 F
3. Administration 480 300 180 U
4. Blood Tests 2,400 2,000 400 U
A.

I and II

B.

II and III

C.

III and IV

D.

I and IV

E.

I and III

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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