The Static Budget Is Used to Compute Flexible Budget Variances

question 203

True/False

The static budget is used to compute flexible budget variances as well as cost and efficiency variances for direct materials and direct labor.

---

Definitions:

Fixed Costs

Overheads like rent, salaries, and insurance that stay the same, irrespective of how much is produced or sold.

Break-Even

The point at which total costs equal total revenues, resulting in no net loss or gain for a business.

Variable Cost

Costs that vary directly with the level of production or volume of output.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, providing a basis for operational planning.