The Flexible Budget Variance

question 62

Multiple Choice

The flexible budget variance:

• A) directs management's attention to specific reasons for why budgeted income differed from actual operating income.
• B) compares the static budget to the flexible budget.
• C) removes any differences between budgeted operating income and actual operating 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:

Price Elasticity

A gauge for assessing how changes in price affect the supply or demand volumes of a product.

Demand Curve

A visual chart that illustrates the connection between a product's price and how much of it consumers want to buy.

Price Cut

A reduction in the selling price of goods or services, often to attract more customers or boost sales.

Consumers Spend

The total amount of money expended by consumers on goods and services within a specific time period.