An Unfavorable Flexible Budget Variance in Operating Income Might Be

question 56

Multiple Choice

An unfavorable flexible budget variance in operating income might be due to a(n) :

• A)increase in price.
• B)decrease in volume.
• C)increase in variable expenses per unit.
• D)decrease in fixed costs.

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Definitions:

Efficiency Variance

The difference between the actual input used in production and the standard input that was expected to be used.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a category or period, indicating over or underspending.

Quantity Variance

The difference between the actual quantity of materials or labor used in production and the expected (or standard) quantity.

Overhead Cost Variance

The difference between the actual overhead costs incurred and the standard or expected overhead costs.