FAVORABLE VARIANCE Definition

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FAVORABLE VARIANCE is a variance created by using or spending less of a given resource than specified by the standard, often categorized as rate (spending less per hour for labor for a given amount of production), efficiency (using less hours for a given amount of production), usage (using less materials for a given amount of production) or price (paying less to a vendor for a given purchased item).

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REASONABLE ASSURANCE, in internal control, is the fact that internal controls, no matter how well designed and operated, cannot guarantee that an entity’s objectives will be met because of inherent limitations in all internal control systems.

PRODUCT is: a. the end result of the manufacturing process, b. commodities offered for sale, or c. an artifact that has been created by someone or some process.

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