Topic 4 - Variances Flashcards
1
Q
Price Variance
A
The difference between the actual selling price of a product and the budgeted selling price is multiplied by the actual quantity sold. Helps assess how changes in pricing affect overall revenue.
2
Q
Why is there a price variance
A
- Changes in supply and demand for product
- Inflation
3
Q
Quantity Variance
A
Difference between the actual quantity of inputs used and the budgeted quantity, multiplied by the budgeted price
4
Q
A
5
Q
Static Budget
A
The difference between actual and budgeted DM or DL
- Based on the level of output planned at the start of the budget variance
6
Q
We want actual costs
A
to be less than budgeted
7
Q
Flexible budget
A
Calculates budgeted costs based on the actual output in the budget period
8
Q
Sales volume Variance
A
Actual sales volume and budgeted sales volume
9
Q
Why may the sales volume occur
A
- weaker than anticipated demand
- aggressive competitors taking market share
- Unanticipated market preference away from the product
- Quality problems
