Managers can gain more insight about the static-budget variance by subdividing it into the flexible-budget variance and the sales-volume variance.

Question

Quizplus · Accepted Answer

The statement is correct. By analyzing the static-budget variance into the flexible-budget variance and the sales-volume variance, managers can have a better understanding of the factors that contributed to the variance and take appropriate action to improve performance. The flexible-budget variance is caused by the difference between the actual level of output and the budgeted level of output, while the sales-volume variance is caused by the difference between the actual level of sales and the budgeted level of sales.

Managers Can Gain More Insight About the Static-Budget Variance by Subdividing