The Difference Between Amounts in the Static Budget and the Flexible

question 34

Multiple Choice

The difference between amounts in the static budget and the flexible budget for a revenue centre is caused by which of the following?

• A) The cost of sales
• B) The selling price per unit
• C) The number of units sold differs from planned sales levels
• D) Both the selling price and the number of units sold

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Definitions:

Factory Overhead

Indirect manufacturing costs not directly tied to individual products, encompassing expenses like factory rent, utilities, and equipment depreciation.

Work in Process Inventory

Items in a manufacturing process that are partially completed but not yet finished goods.

Raw Materials Used

The quantity of basic materials and components consumed in the production process to manufacture goods.

Finished Goods Inventory

Inventory of finished goods awaiting sale but not yet purchased by customers.