A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the previous month,the actual fixed costs were lower than the expected fixed costs as per the static budget.This difference results in a(n)________.
A) unfavorable flexible budget variance for fixed costs
B) favorable sales volume variance for fixed costs
C) favorable flexible budget variance for fixed costs
D) unfavorable sales volume variance for fixed costs

Question

Quizplus · Accepted Answer

Since actual fixed costs were lower than expected fixed costs as per the static budget, this results in a favorable flexible budget variance for fixed costs. The flexible budget adjusts for changes in actual activity levels and therefore provides a more accurate reflection of the costs that should have been incurred during the period. Thus, a lower actual cost means a more favorable variance compared to the flexible budget.

A Company Is Analyzing Its Month-End Results by Comparing It