A306 - Chapter 9 SB

If the planned budget revenue for 5,000 units is $120,000, the flexible budget revenue for 4,500 units is ______.

$120,000/5,000 = $24 per unit $24* 4,500 = $108,000

The variance analysis cycle ______.

begins with the preparation of performance report

An estimate of what revenue and costs should have been, based on the actual level of activity is shown on a ______.

flexible budget

A favorable activity variance may not indicate good performance because a favorable activity variance ______.

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

A performance report shows that the planning revenue was $240,000, the flexible budget revenue was $225,000, and actual revenue was $230,000. The activity variance is $______ ______

240,000-225,000= 15,000 U (Bud -Actual) Since you expected your revenue to be more your activity variance would end up to be Unfavorable. 15,000 U

Activity variance : Spending/ Revenue Variance:

Subtract planned budget from flexible budget Subtract flexible budget from actual results

The difference between a revenue or cost item in the planning budget and the same item in the flexible budget at the actual level of activity is a(n) ______ variance.

activity

A revenue variance is the ______.

difference between what revenue should have been at the actual level of activity and the actual revenue

When actual revenue ______ what the revenue should have been, the variance is labeled favorable.

exceeds

A budget that takes into account how costs are affected by changes in level of activity is a(n) ______ budget.

flexible

Unfavorable activity variances may not indicate bad performance because ______.

increased activity should result in higher variable costs

A budget that is prepared at the beginning of the period for a specific level of activity is called a ______ budget.

planning

Select all that apply A flexible budget shows what budgeted amounts should have been at the actual level of activity. As a result of this change in activity, the flexible budget will show a change in total______. -Revenue -Fixed Costs - Variable Costs

-Revenue -Variable Costs

Select all that apply: A performance report shows that the planning revenue was $200,000, the flexible budget revenue was $225,000, and actual revenue was $223,000. Which of the following statements are true? -The revenue variance is $2,000 Favorable. -The activity variance is $25,000 Unfavorable. -The activity variance is $25,000 Favorable. -The revenue variance is $2,000 Unfavorable.

-The activity variance is $25,000 Favorable. -The revenue variance is $2,000 Unfavorable.

Select all that apply Possible causes of a spending variance include -paying less than expected for inputs -changes in technology -using too many inputs for the actual level of activity -producing more or less product than expected

-paying less than expected for inputs -changes in technology -using too many inputs for the actual level of activity

Which of the following statements is true? -Fixed costs are often more controllable than variable costs. -It is easier to significantly reduce variable costs than to reduce fixed costs. -A cost is fixed if it is proportional to activity.

Fixed costs are often more controllable than variable costs.

The difference between a revenue or cost item in the planning budget and the same item in the flexible budget at the actual level of activity is a(n)______variance

activity