Accounting 2 : Exam 2 : Ch. 9

What kind of budget compares actual costs to what the costs should have been for the actual level of activity?

Flexible Budget

Focuses on important variances and ignores trivial ones

Management by Exception

Are variances more accurate when using: -Multiple Cost Drivers -Single Cost Drivers

Multiple Cost Drivers

Are FC or VC proportional to activity?

VC

If activity levels are lower than expected, total ________ cost will be lower than expected.

Variable

Commission expense is budgeted to be $16,000 at a planned sales level of 4000 units. If only 2900 units are sold, how much commission expense will appear on the flexible budget, and is the activity variance favorable or unfavorable?

11,600 and Favorable

A performance report shows that the planned revenue was $200,000, the flexible budget revenue was $225,000, and actual revenue was $223,000. Which of the following statements are true? - Revenue Variance is $2000 Favorable -Activity Variance is $25,000 Favorable - Activity Variance is $25,000 Unfavorable -Revenue Variance is $2000 Unfavorable

AV = $25,000 Favorable RV = $2000 Unfavorable

What variance is the difference between a revenue or cost item in the static planning budget and the same item in the flexible budget at the actual level of activity?

Activity Variance

Are FC or VC more controllable?

FC

What kind of budget is prepared at the beginning of the period for a specific level of activity?

Planning Budget

What variance is the difference between what the total sales should have been, given the actual level of activity for the period, and the actual total sales?

Revenue Variance

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

Spending Variance

What kind of budget is an unchanged planning budget?

Static Planning Budget

When an activity level increases by 15%, Net Operating Income will increase by.... exactly 15% more than 15% less than 15%

more than 15%