A Flexible-Budget Variance Can Be Decomposed into an Efficiency Variance

question 50

True/False

A flexible-budget variance can be decomposed into an efficiency variance and a rate variance.

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Definitions:

Unit Sales Price

The price at which a single unit of product is sold.

CVP Graph

A visual representation of the Cost-Volume-Profit analysis that shows the relationship between total costs, sales volume, and profit.

Profit and Loss

The profit and loss statement is a financial report that summarizes revenues, costs, and expenses incurred during a specific period, usually a fiscal quarter or year.

CVP Chart

A graphical representation used in Cost-Volume-Profit analysis to show the effects of different levels of volume and cost on operating profits.