Chapter 10: Flexible Budgets and Performance Analysis

the spending variance is labeled as favorable when the:

actual cost is less than what the cost should have been at the actual level of activity

a spending variance is the:

difference between what a cost should have been at the actual level of activity and the actual amount of the cost

planning budgets are sometimes called __________ budgets

static

favorable variance

A variance that causes operating income to be higher than budgeted

unfavorable variance

Difference in revenues or costs, when the actual amount is compared to the budgeted amount, that contributes to a lower income.

comparing actual costs to static planning budget costs only make sense if the costs are:

fixed

Is fixed costs or variable costs often more controllable?

fixed costs

what costs and revenues should be for the actual level of activity is shown on a _____________ budget

flexible

A favorable activity variance for a cost may not indicate good performance because a favorable activity variance:

for a variable cost will occur because the actual level of activity is less than the budgeted level

A cost center's performance report does not include:

net operating income

the flexible budget ______________ report combines activity and revenue and spending variances.

performance

the difference between how much a cost should have been, given the actual level of activity, and the actual amount of the cost is a ______________ variance.

spending