Question

question 27 (1 point)
a negative cost variance (actual > budget) typically indicates:
overspending that requires root - cause analysis and corrective action.
underutilization of capacity.
perfect budget performance.
no action needed.

Explanation:

Cost variance is calculated as \( CV = Budget - Actual \). When \( Actual>Budget \), \( CV<0 \). A negative cost variance means more money was spent than budgeted (overspending). Root - cause analysis (to find why overspending occurred) and corrective action (to prevent future overspending) are typically required. Underutilization of capacity would relate more to efficiency variances in resource usage (not directly cost variance). Perfect budget performance would mean \( CV = 0 \) (Actual = Budget). And no action needed is incorrect as overspending (a negative cost variance) is an issue that should be addressed.

Answer:

Overspending that requires root - cause analysis and corrective action.