The Flexible Budget Variance

question 84

Multiple Choice

The flexible budget variance:

• A) directs management's attention to specific reasons for why budgeted income differed from actual income.
• B) compares the static budget to the flexible budget.
• C) removes any differences between budgeted operating income and actual income that are attributable to differences in budgeted and actual volume.
• D) is most often used to determine whether or not there is sufficient demand for a company's product.

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Definitions:

Assigned Cycle Time

The preset duration within which a particular task or operation must be completed in a production process.

Efficiency

The ability to accomplish a task or goal with a minimum expenditure of time, effort, and cost, often evaluated in terms of productivity.

Cycle Time

The total time from the beginning to the end of a process, including both processing and waiting times.

Daily Operating Time

The total time per day during which a business or system is operational and open for business.