A planning budget is prepared before the period begins and is valid for only the planned level of activity. TRUE OR FALSE 2. An unfavorable activity variance for a cost indicates that spending was higher than it should have been for the actual level of activity for the period. TRUE OR FALSE 3. The activity variance for revenue is unfavorable if the actual revenue for the period is less than the revenue in the static planning budget. TRUE OR FALSE 4. If the actual level of activity is 4% more than planned, then the fixed costs in the static budget should be increased by 4% before comparing them to actual costs.  TRUE OR FALSE

An unfavorable activity variance for revenue indicates that activity was less than expected when the master budget was developed. True or False True False

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Which of the following statements is true?   A) The spending variance for a variable expense will usually equal zero.   B) The spending variance for a variable expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense.   C) The spending variance for a variable expense will be favorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense.   D) The spending variance for a variable expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.

The Production Budget should be prepared before the Direct Materials and Direct Labor Budgets. TRUE FALSE

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4. Explain the differences between fixed and flexible budgets and their relevance in evaluating operational performance.

How do managers use budgets to control business activities?a) Match the concept (by number) to the correct terminology. 1. Static Budget2. Budget Performance Report3. Variance4. Static Budget Variance5. Flexible Budget6. Flexible Budget Variance7. Sales Volume Variance______ A budget prepared for various levels of sales volume.______ The difference between actual results and the expected results in the flexible budget for the actual units sold. ______ The difference between the expected results in the flexible budget for the actual units soldand the static budget. _____ The difference between actual results and the expected results in the static budget. _____ A report that summarizes the actual results, budgeted amounts, and the differences. _____ A budget prepared for only one level of sales volume. _____ The difference between an actual amount and the budgeted amount; labeled as favorable if it increases operating income and unfavorable if it decreases operating income. In…