ACC 208: Chapter 10

Planning Budget

Prepared before the period begins and is valid for only the planned level of activity -shows what should have happened at the budgeted level of activity

Activity Variances

All variances solely due to the difference in level of activity between the planning budget from the beginning of the period and the actual level of activity

Revenue Variance

Difference between what the total revenue should have been, given the actual level of activity for the period -If actual revenue exceeds what should have been...favorable -If actual revenue is less than what should have been been...unfavorable

Flexible Budget

Estimate of what revenues and costs should have been, given the actual level of activity for the period -shows what should have happened at the actual level of activity

Spending Variance

The difference between how much a cost should have been, given the actual level of activity, and the actual amount of cost -If the actual cost is greater than what the cost should have been, the variance is labeled as unfavorable -If the actual cost is less than what the cost should have been, the variance is labeled as favorable