3) Flexible Budget Variances • Compute a flexible budget at the actual level of activity Find the flexible budget variances by comparing the flexible budget to the actual costs ● Budgeted Cost per Test Salaries Benefits Supplies Training Total $30 5 3 2 $40 Flexible Budget Why is this analysis more useful? Actual Costs $420,000 70,000 50,000 30.000 $570,000 Flexible Budget Variance

Estimating the effects of changes in budget assumptions, such as determining the impact of an increase or decrease in sales, is called:   Question 4 options:   static budget analysis.   sensitivity analysis.   variance analysis,   cost reduction analysis.       (Ch 10) An advantage of a flexible budget is that it:   Question 5 options:   allows comparison of actual costs to master (static) budget costs.   considers only variable costs.   allows comparisons of actual costs to the costs that should have been incurred, given the level of sales.   allows management freedom in meeting profitability goals.

Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2020, it budgeted to manufacture and sell 3,000 tires at a variable cost of $73 per tire and total fixed costs of $57,000. The budgeted selling price was $111 per tire. Actual results in August 2020 were 2,700 tires manufactured and sold at a selling price of $113 per tire. The actual total variable costs were $218,700, and the actual total fixed costs were $53,500. Read the requirements Requirement 1. Prepare a performance report with a flexible budget and a static budget Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable. (For variances with a 10 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label) Units sold Revenues Variable costs Contribution margin Fixed costs Operating income Actual Results

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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.

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When 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 variance

Total variance in variance analysis compares ● Flexible budget and actual outcome Static budget and flexible budget Flexible budget and static outcome Static budget and actual outcome

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Management Accounting Question (Qualitative Short Answer) a. Why is the sales forecast the starting point in budgeting? b. What is a perpetual budget? c. Which is a better basis for evaluating actual results: budgeted performance or past performance? Why? d. The materials price variance can be computed at what two different points in time? Which point is better and why? e. What effect, if any, would you expect purchasing poor-quality materials to have on direct labor variances? f. Distinguish between ideal and practical standards. g. Costs associated with the quality of conformance can be broken down into four broad groups. What are these four groups and how do they differ? h. What is likely the most effective way to reduce a company's total quality costs? i. What are the three main uses of quality cost reports?