Answer the Following Questions Using the Information Below

question 122

Multiple Choice

Answer the following questions using the information below:
These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual; B = Budgeted; P = Price; Q = Quantity.
-Which variance is calculated using the formula (AQ - BQ) BP is the ________.

• A) efficiency variance
• B) price variance
• C) total flexible-budget variance
• D) spending variance

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Definitions:

Operating Leverage

The degree to which a company or project can increase operating income by increasing revenue, emphasizing the fixed versus variable costs structure.

Break-Even Point

The sales level at which a company neither makes a profit nor incurs a loss.

Degree Of Operating Leverage

A measure of how much a company's operating income can increase with a given increase in sales. It highlights the sensitivity of a company's operating income to changes in sales.

Percentage Change

A mathematical calculation that shows how much a quantity has increased or decreased as a percentage of its previous value, often used to measure growth rates or changes in financial metrics.