Identify which statement below would not be a possible reason for a variance between a flexible budget and actual results.
A)Material prices were different than expected.
B)Labor prices were different than expected.
C)The actual volume of activity was different than expected.
D)The amount of labor used per unit of output was different than expected.

Question

Quizplus · Accepted Answer

A flexible budget adjusts for changes in the volume of activity, so a variance due to actual volume of activity being different than expected would not be a reason for a variance between a flexible budget and actual results. Choices A, B, and D involve costs that can vary from the budgeted amounts due to factors other than activity volume, which would cause variances in a flexible budget.

Identify Which Statement Below Would Not Be a Possible Reason