The Sum of the Cost Variances and Efficiency Variances Equal

question 35

Multiple Choice

The sum of the cost variances and efficiency variances equal ________.

• A) the static budget variance
• B) the flexible budget variance
• C) the difference between the flexible budget and the static budget
• D) the difference between the static budget and the previous year's actual results

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Definitions:

Net Profits

The actual profit after working expenses not included in the calculation of gross profit have been paid.

Production Quantity

The total volume or number of units of a product made by a company or industry.

Contribution Margin

Contribution margin is a cost accounting concept that calculates the difference between a product's price and its variable costs, indicating how much each unit sold contributes to covering fixed costs and generating profit.

Variable Cost

Costs that fluctuate in relation to the level of output or production, such as raw materials and direct labor expenses.