In variance analysis, which of the following would be a potential action following the identification of an unfavorable variance?

Implementing cost control measures is a logical and often necessary response to an unfavorable variance. When a variance is identified as unfavorable, it indicates that actual results have deviated negatively from what was budgeted or expected, often due to higher costs or lower revenues.

By taking action to control costs, management can work to realign expenses with budgetary expectations and improve overall financial performance. This might involve analyzing the specific areas where costs are exceeding expectations, identifying inefficiencies, or finding alternative suppliers, thereby addressing the root causes of the unfavorable variance.

The other options presented do not effectively address the issue. Increasing fixed budgets to match actual spending would not resolve the inefficiencies and could lead to further problems if the unfavorable variance stems from ongoing mismanagement of resources. Ignoring the variance as insignificant does not provide a basis for improvement and may perpetuate unfavorable conditions. Finally, adjusting revenue targets upward may provide a temporary appearance of alignment but risks setting unrealistic expectations without addressing why actual performance fell short in the first place.

Overall, implementing cost control measures reflects a proactive approach to managing variances and ensuring the organization remains on track financially.