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CIPS L6M9 Exam - Topic 1 Question 21 Discussion

Andrea is the Chief Financial Officer at Big Corporation and is completing a Variance Analysis. She has reviewed the production costs of creating item B, and this month's costs show a variance to budget of -200. What does this mean?
B) Less money was spent than expected
A) More money was spent than expected
C) The organisation has lost 200
D) The organisation has gained 200

CIPS L6M9 Exam - Topic 1 Question 21 Discussion

Actual exam question for CIPS's L6M9 exam
Question #: 21
Topic #: 1
[All L6M9 Questions]

Andrea is the Chief Financial Officer at Big Corporation and is completing a Variance Analysis. She has reviewed the production costs of creating item B, and this month's costs show a variance to budget of -200. What does this mean?

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Suggested Answer: B

A negative variance to budget means that the company spent 200 less than expected, which is a positive outcome. While it may seem counterintuitive, a negative variance in this context indicates cost savings rather than overspending. Option D is incorrect because the organisation has saved 200, not gained it. (See p.198)


by Wilda at Apr 11, 2026, 03:18 PM

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Sanjuana
4 days ago
But what if it means they gained? I lean towards D.
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Tuyet
9 days ago
I agree with A. The budget was exceeded.
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Elke
14 days ago
No, it's about spending. So, A is correct.
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Cheryl
19 days ago
I feel confused. Can it also mean a loss?
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Mignon
25 days ago
Definitely A. A negative variance usually indicates overspending.
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Willard
30 days ago
I think it means more money was spent than expected.
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Mattie
1 month ago
Yup, A is the right answer! Always keep an eye on those variances.
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Sommer
1 month ago
-200 sounds bad, but is it really that serious?
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Evangelina
2 months ago
Wait, how can they lose 200? I thought it was a gain?
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Kristine
2 months ago
Definitely A! Can't believe some people get this wrong.
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Kallie
2 months ago
That's a negative variance, so more money was spent than expected.
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Wava
2 months ago
I agree, A makes the most sense here.
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Laurena
2 months ago
I thought variances were always good news, this sounds bad.
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Noah
2 months ago
Wait, how can they lose 200 if it's just a variance?
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Cherilyn
4 months ago
Definitely means they spent more than planned.
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Leatha
4 months ago
That's a negative variance, so A is correct.
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Vince
5 months ago
I feel like I’ve seen this before in class, and I think a negative variance usually means less money spent, so I might go with B.
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Jamal
5 months ago
I’m a bit confused because -200 could also imply savings, but I think it’s more about spending more than expected, so maybe A or C?
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Tawna
5 months ago
I remember practicing a similar question where a negative variance indicated overspending, but I’m not completely sure if that applies here too.
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Denise
5 months ago
I think a negative variance means that costs were higher than budgeted, so I’m leaning towards option A.
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