Chapter 21 Flashcards
_________ budget is based on a single predicted amount of sales or other measure of activity.
Fixed
Actual revenue is higher than budgeted revenue, or actual cost is lower than budgeted cost
Favorable variance
Actual revenue is lower than budgeted revenue or actual cost is higher than budgeted cost
Unfavorable variance
________ budget, or ________ budget, is a report based on predicted amounts of revenues and expenses corresponding to the actual level of output
Flexible, variable
Sales - Total variable costs
Contribution margin
Contribution margin - total fixed costs
Income from operations
What is the contribution margin formula?
Sales - Total variable costs
What is the income from operations formula?
Contribution margin - total fixed costs
A _________ Budget Performance Report lists differences between actual performance and budgeted performance based on actual sales volumes or other activities.
flexible
Higher costs are _________ (favorable/unfavorable) in a flexible budget performance report.
unfavorable
The difference between the actual price and the budgeted price per unit of input is the _________ variance.
price
The difference between actual quantity and budgeted quantity of input is the ________ variance.
quantity
The breakdown of price and quantity variance is called ___________ __________.
variance analysis
Preset costs for delivering a product or service under normal conditions
Standard costs
_________ costs are established by personnel, engineering, and accounting studies using past experiences and data.
standard
Management uses these costs to assess the reasonableness of actual costs incurred for producing the product or providing the service
standard
Standard costs are also used because they are _________ costs.
anticipated
Managers focus attention to areas where performance is reasonably close to standard
Management by exception
The difference between the total budgeted overhead cost and the overhead cost that was allocated to products using the predetermined fixed overhead rate
Volume variance
The combination of both overhead spending variances (variable and fixed) and the variable overhead efficiency variance
Controllable variance
The difference between actual cost and standard cost, made up of a price variance and a quantity variance
Cost variance
________ quantity is the input (material or labor) used to manufacture the quantity of output.
Actual (AQ)
_________ quantity is the expected input for the quantity of output.
Standard (SQ)
________ price is the amount paid to acquire the input (materials or labor).
Actual (AP)
