A zero variance occurs when actual results equal budgeted results.

A zero variance occurs when actual results equal budgeted results.

• A. Less favorable
• B. More favorable
• C. No variance
• D. Zero variance

Answer: (D)

In budgeting, variance measures how far actual results are from what was planned. It’s computed as actual minus budget. When actual results match budget, the difference is zero, so there’s no deviation to report. This situation is described as a zero variance. Since there’s no difference, there’s no direction to classify as favorable or unfavorable. While you could say there’s no variance in plain language, the standard label for this exact outcome is zero variance, which is why that option is the correct one.

In budgeting, variance measures how far actual results are from what was planned. It’s computed as actual minus budget. When actual results match budget, the difference is zero, so there’s no deviation to report. This situation is described as a zero variance. Since there’s no difference, there’s no direction to classify as favorable or unfavorable. While you could say there’s no variance in plain language, the standard label for this exact outcome is zero variance, which is why that option is the correct one.