Chapter 9, Problem 16E

1

To determine

Planning budget

It is a budget that a company prepares to get an estimate of its total expenses. This budget uses estimated data and estimated hours.

To prepare: A planning budget for the production department.

2

To determine

Flexible budget

Flexible budget is a budget that changes as per the changes in the volumes. It is considered as more useful than the static budget. It shows variable cost and fixed cost incurred by a company separately and shows the total amount of expenses. It considers the actual hours rather than standard hours.

To prepare: A flexible budget for the month march.

3

To determine

Spending variance

A spending variance shows the difference between the budgeted or expected expenses and actual expenses. It is either favorable for the company or unfavorable.

To calculate: Amount of spending variance by comparing actual and standard cost.