Total master budget variances = activity- level variances + flexible- budget variances.

Question

Quizplus · Accepted Answer

The total master budget variance is the difference between the actual results and the budgeted results. The activity-level variance is the difference between the actual results and the flexible budget, which is a budget that is adjusted for the actual level of activity. The flexible-budget variance is the difference between the flexible budget and the static budget, which is a budget that is not adjusted for the actual level of activity. Therefore, the total master budget variance is equal to the activity-level variance plus the flexible-budget variance.

Total Master Budget Variances = Activity- Level Variances + Flexible-