Question 1

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual selling price was higher than projected in the static budget. What kind of variance would that produce?

Accepted Answer

Since the actual selling price was higher than projected, this would result in a favorable variance for sales revenues. A flexible budget takes into account changes in the selling price, whereas a static budget does not. Therefore, the favorable variance would be reflected in the flexible budget, not in the static budget.

Question 2

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual variable expenses per unit were lower than projected in the static budget. What kind of variance would that produce?

Accepted Answer

If actual variable expenses per unit were lower than projected in the static budget, the company would have a favorable flexible budget variance for variable expenses. This is because the flexible budget adjusts for changes in volume, so if the company produced fewer units than the static budget projected, the flexible budget would lower its variable expense projections accordingly. As a result, the actual variable expenses would be lower than the flexible budget projections, creating a favorable variance.

Question 3

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:   Based on the above data, how much was the sales volume variance for fixed expenses?

Accepted Answer

The answer of Onyx Company prepared a static budget at...

Question 4

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:   Based on the above data, how much was the flexible budget variance for variable expenses?

Accepted Answer

The answer of Onyx Company prepared a static budget at...

Question 5

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:   Based on the above data, how much was the sales volume variance for variable expenses?

Accepted Answer

The answer of Onyx Company prepared a static budget at...

Question 6

Onyx Company prepared a static budget at the beginning of the month. It's the end of the month and the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:   Based on the above data, how much was the flexible budget variance for sales revenue?

Accepted Answer

The answer of Onyx Company prepared a static budget at...

Question 7

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:   Based on the above data, how much was the flexible budget variance for operating income?

Accepted Answer

Flexible Budget Variances: 
Revenue variance = actual revenue - flexible budget revenue = $29,500 - $28,050 = $1,450 F
Variable cost variance = actual variable cost - flexible budget variable cost = $17,500 - $17,640 = $140 U
Fixed cost variance = actual fixed cost - flexible budget fixed cost = $9,600 - $9,600 = $0
Flexible budget operating income = flexible budget revenue - flexible budget variable cost - flexible budget fixed cost = $28,050 - $17,640 - $9,600 = $580 F
Flexible budget variance for operating income = actual operating income - flexible budget operating income = $4,690 - $580 = $5,490 F. Therefore, the correct answer is D.

Question 8

Portobello Company prepared the following static budget for the coming month:
  Using the format below, please prepare a flexible budget including data at volumes of 4,000 and 6,000 units.

Accepted Answer

The answer of Portobello Company prepared the following static budget...

Question 9

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

Accepted Answer

The answer of The Carolina Products Company has just completed...

Question 10

The sales volume variance is the difference between the static budget and the flexible budget amounts, and is caused by actual sales volume being different than budgeted sales volume.

Accepted Answer

The statement accurately reflects the definition and cause of sales volume variance.

Question 11

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

Accepted Answer

The flexible budget variance for fixed expenses is the difference between the actual fixed expenses and the budgeted fixed expenses. In this case, the actual fixed expenses are higher than the budgeted fixed expenses, indicating an increase in fixed costs.

Question 12

Which of the following BEST describes flexible budget variance?

Accepted Answer

Flexible budget variance is the difference between actual amounts and the flexible budget amounts, primarily due to differences in price and costs, not volumes. This variance helps in analyzing how well the costs were controlled.

Question 13

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for sales revenues?

Accepted Answer

The sales volume variance is the difference between the flexible budget and the static budget, and is solely caused by changes in sales volume. Therefore, an increase in sales volume would cause a favorable sales volume variance, while any of the other options listed would affect other variances.

Question 14

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:   Based on the above data, how much was the flexible budget variance for fixed expenses?

Accepted Answer

The answer of Onyx Company prepared a static budget at...

Question 15

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:   Based on the above data, how much was the sales volume variance for operating income?

Accepted Answer

The answer of Onyx Company prepared a static budget at...

Question 16

Ibis Company prepared the following static budget for the coming month:
  Using the format below, please prepare a flexible budget including data at volumes of 13,000 and 14,000 units.

Accepted Answer

The answer of Ibis Company prepared the following static budget...

Question 17

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:   Based on the above data, how much was the sales volume variance for revenues?

Accepted Answer

The answer of Onyx Company prepared a static budget at...

Question 18

Which of the following BEST describes sales volume variance?

Accepted Answer

Sales volume variance is the difference between the flexible budget and static budget due to differences in volumes. It measures the impact of actual sales volume on profits, compared to the expected sales volume as per the static budget.

Question 19

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for variable expenses?

Accepted Answer

The flexible budget variance for variable expenses is calculated by subtracting the flexible budget for variable expenses from the actual variable expenses. In this case, the flexible budget for variable expenses is $36,450 and the actual variable expenses are $39,000, resulting in a flexible budget variance of $2,550 (Favorable). Since the actual expenses are higher than the flexible budget, it means that either the price per unit increased or the variable cost per unit increased or the sales volume decreased. Since sales volume increased, we can eliminate option C. Fixed costs are unaffected by changes in volume, so we can eliminate option D. Therefore, the correct answer is B, which indicates that the variable cost per unit increased, resulting in a higher overall variable expense.

Question 20

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for variable expenses?

Accepted Answer

The sales volume variance for variable expenses measures the deviation between actual variable expenses and the flexible budget amount for the actual sales volume. If the actual sales volume is greater than the flexible budget sales volume, there should be a favorable sales volume variance for variable expenses. This means that the company has sold more units than planned, resulting in higher revenue and possibly lower unit costs due to economies of scale. Therefore, the correct interpretation of the sales volume variance for variable expenses is an increase in sales volume.

Quiz 23: Flexible Budgets and Standard Costs

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual selling price was higher than projected in the static budget. What kind of variance would that produce?

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual variable expenses per unit were lower than projected in the static budget. What kind of variance would that produce?

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the sales volume variance for fixed expenses?

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the flexible budget variance for variable expenses?

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the sales volume variance for variable expenses?

Onyx Company prepared a static budget at the beginning of the month. It's the end of the month and the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the flexible budget variance for sales revenue?

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the flexible budget variance for operating income?

Portobello Company prepared the following static budget for the coming month: Using the format below, please prepare a flexible budget including data at volumes of 4,000 and 6,000 units.

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

The sales volume variance is the difference between the static budget and the flexible budget amounts, and is caused by actual sales volume being different than budgeted sales volume.

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

Which of the following BEST describes flexible budget variance?

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for sales revenues?

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the flexible budget variance for fixed expenses?

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the sales volume variance for operating income?

Ibis Company prepared the following static budget for the coming month: Using the format below, please prepare a flexible budget including data at volumes of 13,000 and 14,000 units.

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the sales volume variance for revenues?

Which of the following BEST describes sales volume variance?

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for variable expenses?

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for variable expenses?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for sales revenues?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for variable expenses?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for variable expenses?