Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Chapter 10, Problem 8QC
To determine
To identify: Which of the given statements is false.
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which formula is correct for budget variance. Please see below:
* Static Budget Variance =(Static Budget-Actual) Flexible Budget Variance = (Flexible Budget-Actual)
* Static Budget Variance =(Actual- Static Budget-) Flexible Budget Variance = (Actual- Flexible Budget)
Please make it more clear do I need to subtract budget from actual or actual from budget?
Distinguish among a budget, a performance report, and a variance.
Question content area bottom
Part 1
A.
A budget measures the differences between a performance report and a variance; a performance report compares actual results with the budget; and a variance is a quantitative expression of a plan of action.
B.
A budget compares the performance report with variances; a performance report measures the differences between budget and actual; and a variance is a quantitative expression of a plan of action.
C.
A budget compares actual results with the performance report; a performance report is a quantitative expression of a plan of action; and a variance measures the differences between budget and actual.
D.
A budget is a quantitative expression of a plan of action; a performance report compares actual results with the budget; and a variance measures the differences between budget and actual.
The performance evaluation of a cost center is typically based on its
a. sales volume variance.
b. ROI.
c. static budget variance.
d. flexible budget variance.
Chapter 10 Solutions
Managerial Accounting (5th Edition)
Ch. 10 - (Learning Objective 1) Companies often...Ch. 10 - (Learning Objective 1) Which of the following is...Ch. 10 - (Learning Objective 1) In terms of responsibility...Ch. 10 - (Learning Objective 2) Which of the following is...Ch. 10 - (Learning Objective 2) A segment margin is the...Ch. 10 - Prob. 6QCCh. 10 - Prob. 7QCCh. 10 - Prob. 8QCCh. 10 - Prob. 9QCCh. 10 - Prob. 10QC
Ch. 10 - Identify and understand responsibility centers...Ch. 10 - Identify types of responsibility centers (Learning...Ch. 10 - Identify centralized and decentralized...Ch. 10 - Prob. 10.4SECh. 10 - Prob. 10.5SECh. 10 - Prob. 10.6SECh. 10 - Calculate ROI (Learning Objective 3) Refer to Epic...Ch. 10 - Prob. 10.8SECh. 10 - Prob. 10.9SECh. 10 - Prob. 10.10SECh. 10 - Prob. 10.11SECh. 10 - Interpret a performance report (Learning Objective...Ch. 10 - Prob. 10.13SECh. 10 - Classify KPIs by balanced scorecard perspective...Ch. 10 - Use vocabulary terms (Learning Objectives 1, 2, 3,...Ch. 10 - Prob. 10.16SECh. 10 - Identify type of responsibility center (Learning...Ch. 10 - Complete and analyze a performance report...Ch. 10 - Prepare a segment margin performance report...Ch. 10 - Compute and interpret the expanded ROI equation...Ch. 10 - Prob. 10.21AECh. 10 - Prob. 10.22AECh. 10 - Comparison of ROI and residual income (Learning...Ch. 10 - Prob. 10.24AECh. 10 - Comprehensive flexible budget problem (Learning...Ch. 10 - Prepare a flexible budget performance report...Ch. 10 - Work backward to find missing values (Learning...Ch. 10 - Construct a balanced scorecard (Learning Objective...Ch. 10 - Sustainability and the balanced scorecard...Ch. 10 - Identify type of responsibility center (Learning...Ch. 10 - Complete and analyze a performance report...Ch. 10 - Prob. 10.32BECh. 10 - Prob. 10.33BECh. 10 - Prob. 10.34BECh. 10 - Prob. 10.35BECh. 10 - Prob. 10.36BECh. 10 - Prob. 10.37BECh. 10 - Prob. 10.38BECh. 10 - Prob. 10.39BECh. 10 - Prob. 10.40BECh. 10 - Prob. 10.41BECh. 10 - Sustainability and the balanced scorecard...Ch. 10 - Prepare a budget with different volumes for...Ch. 10 - Prepare and interpret a performance report...Ch. 10 - Prob. 10.45APCh. 10 - Prob. 10.46APCh. 10 - Prob. 10.47APCh. 10 - Evaluate subunit performance (Learning Objectives...Ch. 10 - Prob. 10.49BPCh. 10 - Prob. 10.50BPCh. 10 - Evaluate divisional performance (Learning...Ch. 10 - Prob. 10.52BPCh. 10 - Determine transfer price at a manufacturer under...Ch. 10 - Evaluate subunit performance (Learning Objectives...Ch. 10 - Prob. 10.55SC
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- Of the following pairs of variances found in a flexible budget report, which pair is most likely to be related? a. Material price variance and variable overhead efficiency variance. Ob. Labor rate variance and variable overhead efficiency variance. Oc. Material usage variance and labor efficiency variance. Od. Labor efficiency variance and fixed overhead volume variance.arrow_forwardWhich of the following is true? a. The Flexible Budget Variance for operating income is calculated by taking the actual operating income minus the static budget operating income. b. The Flexible Budget Variance for operating income is calculated by taking the actual operating income minus the flexible budget operating income. c. The Flexible Budget Variance for operating income is calculated by taking the flexible budget operating income minus the actual operating income. Which of the following elements are used in calculating Costs in a Flexible Budget? a. Budgeted unit costs times actual quantities of output b. Actual unit costs times budgeted quantities of output c. Budgeted unit costs times budgeted quantities of output d. Actual unit costs times actual quantities of output A Favorable Variance results when (check all that apply) a. Actual costs exceed Budgeted costs b. Budgeted costs exceed…arrow_forwardWhich of the following is true? a. The Static Budget Variance for operating income is calculated by taking the actual operating income minus the static budget operating income. b. The Static Budget Variance for operating income is calculated by taking the actual operating income minus the flexible budget operating income. c. The Static Budget Variance for operating income is calculated by taking the flexible budget operating income minus the actual operating incomearrow_forward
- The variance that highlights the difference between actual sales volume and the master budget sales volume is the sales activity variance. O flexible budget variance. O master budget variance. O MOH volume variance.arrow_forwardPrepare a flexible budget and recompute the budget variances. Explain what might have caused the fixed costs to be different from the amount budgeted.arrow_forwardWhen analyzing an organization's budget using 2-variance analysis, the 2 elements used are volume variance and: Select one: a. quantity variance b. price variance c. applied variance O d. budget variancearrow_forward
- How can the total flexible-budget variance be broken down (i.e., what are the constituent parts of this total variance)?arrow_forwardThe Flexible-Budget Variance is the sum of a. The static-budget variance and the sales-volume variance b. The sales-volume variance and the efficiency variance c. The price variance and the efficiency variance d. The static-budget variance and the price variancearrow_forwardA Favorable Variance results when (check all that apply) a. Actual costs exceed Budgeted costs b. Budgeted costs exceed Actual costs c. Actual revenues exceed Budgeted revenue d. Budgeted revenue exceed Actual revenuesarrow_forward
- Requirement: Compute for the following variances1. Fixed Spending Variance2. Variable Spending Variance3. Efficiency Variance4. Controllable Variance5. Volume Variance6. Spending Variance 7. Total Variancearrow_forwardIf so, what do you suggest be done to improve the system? Prepare a flexible budget and recompute the budget variances.arrow_forwardThis variance is the difference involving spending less or using less than the budgeted amount.arrow_forward
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY