Differences Between the Master Budget and the Flexible Budget Are

question 147

Multiple Choice

Differences between the master budget and the flexible budget are due to:

• A) poor usage of material and labor
• B) a combination of price and material variances
• C) actual activity differing from expected activity levels
• D) problems of cost control

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Definitions:

Consideration

The value, typically expressed in monetary terms, given in exchange for goods, services, or for entering into a contract.

Control

The power to direct the financial and operating policies of an entity with a view to gaining economic benefits from its activities.

Unconditional Contract

An agreement whose execution does not depend on fulfilling any conditions; it is binding upon the parties as soon as it is signed.

Physical Substance

The tangible, material aspect of an asset, referring to its physical existence and properties.