CIPS Exam L6M9 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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Kimberely

3 days 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

9 days 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

14 days 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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