Subtracting the flexible budget amount from the actual outcome calculates _____________?
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Answer: B. flexible budget variance
Explanation
Subtracting the flexible budget amount from the actual outcome isolates the variance caused by operational efficiency or pricing. This specific calculation yields the flexible budget variance. It highlights performance differences under actual operating conditions. A flexible budget adjusts budgeted revenues and costs to the actual output level achieved during the period. Comparing this benchmark to actual results removes volume-related distortions. This provides a clearer picture of cost control.
Managers use flexible budget variances to evaluate production efficiency and cost management. It helps pinpoint whether departments spent more than expected for the units actually produced. This drives targeted operational improvements. Unstated budget variance and constant budget variance are fictitious accounting terms. Static budget variance compares actual results against the original unadjusted budget rather than the flexible benchmark.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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