The variance that is best for measuring operating performance is the:
A)static-budget variance
B)flexible-budget variance
C)sales-volume variance
D)selling-price variance

Question

Quizplus · Accepted Answer

The flexible-budget variance is the most appropriate for measuring operating performance because it compares the actual costs and revenues to what should have been incurred and earned at the actual level of activity. This variance indicates whether the difference between actual results and the budget is due to changes in activity levels, which is important for assessing the performance of the company's management. The static-budget variance only measures the difference between actual results and the budgeted amounts at one activity level, whereas the sales-volume and selling-price variances relate specifically to changes in sales volume or pricing and may not be indicative of overall operating performance.

The Variance That Is Best for Measuring Operating Performance Is