ACC 212

An unfavorable spending variance may reflect waste as well as paying too much for inputs. True False

true

Fixed costs should be included in a flexible budget even though they do not change when the level of activity changes. True False

true

The activity variance for revenue is unfavorable if the actual level of activity for the period is less than the planned level of activity. True False

true

An activity variance is due to the difference between the level of activity used in the flexible budget and the actual level of activity. True False

false

An unfavorable activity variance indicates that activity was too high for the amount of sales. True False

false

Comparing a static planning budget to actual costs is a good way to assess whether variable costs are under control. True False

false

In a flexible budget performance report, actual costs should be compared to the flexible budget at the original budgeted activity level. True False

false

When a flexible budget is used in performance evaluation, actual costs are compared to the static planning budget rather than to what the costs should have been for the actual level of activity during the period. True False

false

A flexible budget should not be used when making comparisons to actual results such as actual expenses. True False

false

The revenue and spending variances are the differences between the flexible budget and the actual results for the period. True False

true

A favorable spending variance occurs when the actual cost exceeds the amount of the cost in the static planning budget. True False

false

A flexible budget cannot be used to estimate what costs should have been at a given level of activity. True False

false

A flexible budget report should contain variable costs and mixed costs but not fixed costs. True False

false

Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled. True False

false

Directly comparing static budget costs to actual costs only makes sense if the costs are variable. True False

false

Fixed costs should be ignored when evaluating how well a manager has controlled costs. True False

false

A flexible budget can be used to estimate what revenues and costs should have been, given the actual level of activity for the period. True False

true

A planning budget is prepared before the period begins and is valid for whatever the actual level of activity turns out to be. T/F

false

A revenue variance is unfavorable if the actual revenue is less than the revenue in the static planning budget. True False

false

A spending variance is the difference between the cost in the static planning budget and the actual amount of the cost for the period. True False

false

A revenue variance is favorable if the actual revenue exceeds what the revenue should have been for the actual level of activity of the period. True False

true

An unfavorable activity variance for a variable cost occurs because the actual level of activity is higher than expected when the static planning budget was prepared. True False

true

Controllability has little to do with whether a cost is fixed or variable. True False

true

If the actual level of activity is 4% less than planned, then the variable costs in the static budget should be decreased by 4% before comparing them to actual costs. True False

true