A job's original budget is $95,000. Approved change orders add $12,000. Forecast cost is now $101,000. Compared with the adjusted budget, what is the projected variance?
Correct Answer
B) $6,000 favorable.
Adjusted budget is $107,000. Forecast cost of $101,000 is $6,000 below adjusted budget, so the variance is favorable.
Why This Is the Correct Answer
Adjusted budget is $107,000. Forecast cost of $101,000 is $6,000 below adjusted budget, so the variance is favorable.
Why the Other Options Are Wrong
Option A: $6,000 unfavorable.
$6,000 unfavorable. is not aligned with the supported result for budget variance; it has the wrong label or classification even if the number looks close.
Option C: $18,000 favorable.
$18,000 favorable. is above the supported result for budget variance; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $18,000 unfavorable.
$18,000 unfavorable. is above the supported result for budget variance; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Updating Job-Cost money test: bucket before math for budget variance.
Reference Hint
Study anchor (closed-book): memorize Budget variance from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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