Management Accounting - Study Mode
[#166] Flexible budget variance is subtracted from actual cost to calculate
Correct Answer
(A) flexible budget cost
Explanation
Solution: Flexible budget variance is subtracted from actual cost to calculate flexible budget cost. A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget. (The static budget amounts do not change. They remain unchanged from the amounts established at the time that the static budget was prepared and approved.)
[#167] An efficiency variance is subtracted from actual input quantity to calculate
Correct Answer
(D) budgeted input quantity
Explanation
Solution: An efficiency variance is subtracted from actual input quantity to calculate budgeted input quantity.
[#168] An actual cost is subtracted from flexible budget cost to calculate
Correct Answer
(C) flexible budget variance
Explanation
Solution: An actual cost is subtracted from flexible budget cost to calculate flexible budget variance. A flexible budget variance is any difference between the results generated by a flexible budget model and actual results. If actual revenues are inserted into a flexible budget model, this means that any variance will arise between budgeted and actual expenses, not revenues.
[#169] Difference between an actual budget and corresponding amount in static budget is classified as
Correct Answer
(D) static budget variance
Explanation
Solution: Difference between an actual budget and corresponding amount in static budget is classified as static budget variance. Static budget variances are the differences between what a company or individual thought it would spend in its budget versus what it actually did.
[#170] If an actual input price is $70 and budgeted input price is $40, then price variance will be
Correct Answer
(D) $30
Explanation
Solution: Price variance = Actual input price - Budgeted input price = $70 - $40 = $30.