Subtracting the static budget amount from the flexible budget amount yields the __________?
Show answer Hide answer
Answer: A. sales budget variance
Explanation
Subtracting the static budget amount from the flexible budget amount isolates the sales volume variance. This calculation measures the financial impact of selling a different quantity than originally planned. It separates volume effects from operational efficiency. The static budget is prepared for a single planned output level at the start of the period. The flexible budget scales those expectations to the actual units sold. The difference between them is driven entirely by volume changes.
Managers use this variance to understand how market demand fluctuations impact profitability. It helps distinguish between sales team performance and production cost control. This distinction is vital for accurate performance appraisals. Cost budget variance measures differences in spending rather than volume changes. Resultant budget variance is a non-standard descriptive phrase. Static budget variance evaluates the total difference between actual results and the original budget.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
Related questions
Q1. The initial step when constructing an operating budget is __________?
Show answer Hide answer
Answer: C. revenue budget
The revenue budget serves as the foundational starting point when constructing an operating budget. Projected sales volume and selling prices drive almost all subsequent operational plans. Without this initial sales fore...
Q2. The allocation of underallocated or overallocated overhead among work-in-process, finished goods, and cost of goods sold is termed __________?
Show answer Hide answer
Answer: A. proration approach
The proration approach systematically distributes underallocated or overallocated overhead across inventory and cost of goods sold. This adjustment ensures financial statements reflect accurate cost figures at period end...
Q3. The point in the manufacturing process where finished items are inspected to determine their acceptability is classified as __________?
Show answer Hide answer
Answer: B. inspection point
An inspection point designates the specific physical stage where manufactured items undergo quality checks. At this juncture, workers or automated systems determine whether units meet acceptance criteria. Defective items...
Q4. Adding current liabilities to working capital yields _____________?
Show answer Hide answer
Answer: C. current assets
Current assets comprise working capital plus current liabilities. Working capital represents the net liquid resources available after subtracting obligations. Adding liabilities back to this net figure restores the total...
Q5. A positive slope and minimal residual values on a trend line indicate ______________?
Show answer Hide answer
Answer: D. directly proportion
A positive slope on a trend line indicates that variables increase together, showing a direct proportion. Minimal residual values mean the data points fit the line extremely well with little scatter. Together, these char...
Q6. Multiplying target operating income by the tax rate and subtracting that product from the target operating income calculates _____________?
Show answer Hide answer
Answer: B. target net income
Target net income is calculated by subtracting income taxes from target operating income. The tax portion is found by multiplying target operating income by the applicable tax rate. This yields the final earnings availab...