CIPS L6M9 Exam - Topic 2 Question 16 Discussion

Actual exam question for CIPS's L6M9 exam

Question #: 16
Topic #: 2

[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?

AMore money was spent than expected

BLess money was spent than expected

CThe organisation has lost 200

DThe organisation has gained 200

Show Suggested Answer

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 Art at Nov 01, 2025, 04:11 PM

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Carol

16 hours ago

I agree, option A is the right choice.

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Suzi

6 days ago

Definitely, -200 indicates overspending.

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Murray

11 days ago

Agreed, A is the right choice here!

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Mitzie

16 days ago

Wait, how can they lose 200 if it's just a variance?

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Idella

21 days ago

I thought a negative variance meant a gain?

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Tawny

26 days ago

Definitely means more money was spent than planned.

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Dante

1 month ago

I'm with Dana on this one. Less spending is better for the bottom line. Option B for the win!

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Xuan

1 month ago

Haha, option D? Gaining 200? That's wishful thinking. It's gotta be A.

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Bronwyn

1 month ago

C'mon, people. It's clearly option A. The CFO wouldn't be happy about spending more than the budget.

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Dana

2 months ago

I think B is the right answer. Less money spent than expected is a good thing, right?

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Kallie

2 months ago

I’m confused about the terminology. If they spent less, wouldn’t that be a gain? I’m torn between B and D.

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Kimbery

2 months ago

I feel like this is tricky. A -200 variance could mean they spent less, but I thought that was a positive outcome? Maybe it's B?

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Emerson

2 months ago

I think it means more money was spent than expected.

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Kenda

2 months ago

I remember a practice question where a negative variance indicated overspending, but I'm not entirely sure if it applies here too.

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Beckie

2 months ago

Definitely A. Negative variances are never good news for the CFO!

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Magnolia

3 months ago

That's a negative variance, so A is correct.

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Myra

3 months ago

Option A is correct. A negative variance means more money was spent than expected.

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Huey

3 months ago

I think a negative variance means that costs were higher than budgeted, so I would lean towards option A.

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Carin

3 months ago

Got it, I think I've got this now. A negative variance of -200 means Big Corporation spent $200 more than they had planned to on producing item B. The right answer is A.

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Carrol

4 months ago

Based on my knowledge of variance analysis, a negative variance indicates unfavorable performance - the organization spent more than they had budgeted for. So the correct answer is A.

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Kimberely

4 months ago

I'm a little unsure about this one. Is a negative variance always bad, or could it potentially be good in some cases? I'll need to double-check my understanding.

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Maryann

4 months ago

Okay, let's see here. A negative variance means actual costs were higher than budgeted, so the answer must be A) More money was spent than expected.

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Lizbeth

4 months ago

Hmm, this looks like a straightforward variance analysis question. I'll need to think through the meaning of a negative variance to determine the correct answer.

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