Acc chpt. 9

A budget that is based on the actual activity of a period is known as a:

flexible budget

comparing a static planning budget to actual costs is not a good way isn't a good way to asses whether variable costs are under control

true

An unfavorable activity variance for revenue indicates that activity was less than expected when the static planning budget was developed.

False

A flexible budget performance report contains activity variances but not revenue or spending variances.

false

A spending variance is the difference between the amount of the cost in the static planning budget and the amount of the cost in the flexible budget.

false

An activity variance is the difference between an actual revenue or cost and the revenue or cost in the flexible budget that is adjusted for the actual level of activity of the period.

false

If activity is higher than expected, total fixed costs should be higher than expected. If activity is lower than expected, total fixed costs should be lower than expected.

false

spending variance

the difference between the actual amount of the cost and how much a cost should have been given the activity

revenue variance

the difference between the actual revenue and what the revenue should have been given the activity

in a flexible budget, what will happen to fixed costs?

the fixed cost per unit will decrease

A favorable spending variance occurs when the actual cost is less than the amount of the cost in the static planning budget.

true

In a flexible budget, when the activity declines, the total variable cost also declines.

true

The activity variance for revenue is favorable if the revenue in the flexible budget exceeds the revenue in the static planning budget.

true