Which quantity is used as the baseline to calculate Variance?

Which quantity is used as the baseline to calculate Variance?

• A. Actual Usage
• B. Usage
• C. Theoretical Usage
• D. Net Sales

Answer: (C)

Variance assesses how actual results differ from what was planned. For this comparison, the baseline is Theoretical Usage, which represents the standard or expected consumption based on recipes, portion sizes, yields, and planned waste. Actual Usage shows what really happened, and the difference between the two is the variance. Net Sales isn’t part of the usage comparison, and simply saying “Usage” can be ambiguous, lacking the standard reference point. So, Theoretical Usage is the baseline used to calculate Variance.

Variance assesses how actual results differ from what was planned. For this comparison, the baseline is Theoretical Usage, which represents the standard or expected consumption based on recipes, portion sizes, yields, and planned waste. Actual Usage shows what really happened, and the difference between the two is the variance. Net Sales isn’t part of the usage comparison, and simply saying “Usage” can be ambiguous, lacking the standard reference point. So, Theoretical Usage is the baseline used to calculate Variance.