The Carolina Products Company has completed the flexible budget analysis for the 2 nd quarter, which is as given below.
- Which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

Question

The Carolina Products Company has completed the flexible budget analysis for the 2 nd quarter, which is as given below. 
- Which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

Quizplus · Accepted Answer

The flexible budget variance for fixed expenses is the difference between the actual fixed expenses and the budgeted fixed expenses, based on the flexible budget. If the actual fixed expenses are higher than the budgeted fixed expenses, there is an unfavorable flexible budget variance for fixed expenses. This may be due to an increase in the actual fixed costs, which would be a result of an increase in the cost of resources used or an increase in the quantity of resources used. Therefore, an increase in fixed costs is the correct interpretation of the flexible budget variance for fixed expenses.

The Carolina Products Company Has Completed the Flexible Budget Analysis