In Quiet Flag Industries data, which category shows the largest unfavorable variance?

• A. Total Administrative Cost
• B. Total Revenue
• C. Total Operating Cost
• D. Total Selling Cost

Answer: (A)

In variance analysis, you compare actual results to what was budgeted and look at whether the differences are favorable or unfavorable. An unfavorable variance means the outcome was worse than planned—costs higher than budgeted or revenue lower than budgeted—and you measure it by the difference (Actual minus Budgeted for costs, or Budgeted minus Actual for revenue).

The category showing the largest unfavorable variance is the one with the biggest gap in the adverse direction. In Quiet Flag Industries data, administrative costs have the largest disparity—actual administrative costs exceeded the budget by more than any other category. This indicates the biggest adverse impact on overall results from that area, signaling where costs grew more than planned and where management might focus cost-control or reforecast efforts.