What is the selling cost variance for Quiet Flag Industries (Actual vs Budget)?

• A. Favorable 10,000
• B. Unfavorable 10,000
• C. Favorable 40,000
• D. Unfavorable 40,000

Answer: (A)

Selling cost variance shows how actual selling expenses compare to what was budgeted. It is favorable when actual selling costs are lower than the budget, and unfavorable when they are higher.

In this case, actual selling costs were $10,000 less than the budgeted amount. That means the variance is -$10,000, which is reported as a favorable $10,000. So the best choice reflects a favorable 10,000 difference.

If actual costs had exceeded the budget, it would be unfavorable, and a larger difference like 40,000 would follow the same logic with the sign indicating favorable or unfavorable depending on whether actual is below or above budget.