1.When a flexible budget is used in performance evaluation, actual costs are compared to what the costs should have been for the actual level of activity during the period rather than to the static planning budget.
A) True
B) False
2.An activity variance is due solely to the difference between the level of activity assumed in the planning budget and the actual level of activity used in the flexible budget.
A) True
B) False
3.The activity variance for revenue is favorable if the actual level of activity for the period exceeds the planned level of activity.
A) True
B) False
4.The activity variance for revenue is unfavorable if the revenue in the flexible budget is less than the revenue in the static planning budget.
A) True
B) False
5.The revenue and spending variances are the differences between the static planning budget and the actual results for the period.
A) True
B) False
6.A spending variance is the difference between how much a cost should have been, given the actual level of activity, and the actual amount of the cost for the period.
A) True
B) False
7.A favorable spending variance occurs when the actual cost exceeds the amount of that cost in the flexible budget.
A) True
B) False
8.A flexible budget performance report contains both activity variances and revenue and spending variances.
A) True
B) False
9.While fixed costs should not be affected by a change in the level of activity within the relevant range, they may change for other reasons.
A) True
B) False
10.If the actual level of activity is 4% more than planned, then the variable costs in the static budget should be increased by 4% before comparing them to actual costs.
A) True
B) False
11.Which of the following comparisons best isolates the impact of a change in activity on performance?
A) static planning budget and flexible budget
B) static planning budget and actual results
C) flexible budget and actual results
D) master budget and static planning budget