The flexible-budget variance for direct cost inputs can be further subdivided into a ________.
A) static-budget variance and a sales-volume variance
B) sales-volume variance and an efficiency variance
C) price variance and an efficiency variance
D) static-budget variance and a price variance

Question

Quizplus · Accepted Answer

The flexible-budget variance for direct cost inputs can be subdivided into a price variance (the difference between the actual price paid and the budgeted price) and an efficiency variance (the difference between the actual quantity used and the budgeted quantity). The sales-volume variance is a component of the overall flexible-budget variance, but it relates to revenue rather than direct cost inputs. The static-budget variance is the difference between the actual results and the static budget, but this is not specific to direct cost inputs.

The Flexible-Budget Variance for Direct Cost Inputs Can Be Further