Chapter 24, Problem 6CP

To determine

Flexible budget variance:

The variance derived from the difference between the actual results and flexible budget is called a flexible budget variance. As both the actual results and flexible is prepared based on the actual level of activity, the comparison shows the true variance in revenue and spending of a company.

Static Budget performance Report:

The comparison between the actual result and flexible budget shows the static budget performance of a company. The variance derived from static budget performance report always comes with the discrepancy of difference in the level of activity.

To determine:

Why the flexible budget performance report provides more useful information to Trolley’s managers than the static budget performance report. What insights can Trolley’s managers draw from this performance report?