A Flexible-Budget Variance for Any Fixed Cost

question 100

Multiple Choice

A flexible-budget variance for any fixed cost:

• A) Is defined as the difference between flexible-budget fixed cost and the level of fixed costs reflected in the master (static) budget.
• B) Is undefined, except when actual output equals budgeted output.
• C) Is typically zero, because the volume assumed in the flexible budget and the master budget for fixed costs is identical.
• D) Is the difference between budgeted fixed cost and actual fixed cost.
• E) Can be broken down into price and efficiency components.

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Definitions:

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A financial analysis formula that breaks down Return on Equity into three parts: operating efficiency, asset use efficiency, and financial leverage.

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Profit Margin

A financial ratio that measures the percentage of profit a company makes for each dollar of sales.

Return on Investment

A measure evaluating the efficiency or profitability of an investment, calculated as net profit divided by the cost of the investment.