The Dear Dairy Cheese Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following statements would be a correct factor to explain the flexible budget variance for fixed costs?

Question

The Dear Dairy Cheese Company completed the flexible budget analysis for the second quarter,which is given below.  Which of the following statements would be a correct factor to explain the flexible budget variance for fixed costs?

Quizplus · Accepted Answer

The flexible budget variance for fixed costs occurs when there is an actual increase or decrease in fixed costs compared to the budgeted fixed costs. Therefore, the correct factor to explain the flexible budget variance for fixed costs would be an increase or decrease in fixed costs. In this case, the only option that relates to fixed costs is D, which is an increase in fixed costs. A, B, and C do not relate to fixed costs, but rather to sales price, variable cost, and sales volume, respectively.

The Dear Dairy Cheese Company Completed the Flexible Budget Analysis