Week 5-6 - Variance Analysis Flashcards
1
Q
What is the difference between a static budget and a flexible budget?
A
It is the use of the actual output level in the flexible budget
2
Q
What are the differences between Level 0-3 Variance Analysis?
A
Level 0 - Basic comparison of actual vs budgeted figures
Level 1 - Breaks figures into revenues and costs
Level 2 - Further subdivides figures into price and volume effects
Level 3 - Detailed breakdown that focuses on individual components
3
Q
What is the purpose of a Standard Costing system?
A
- It provides estimates of future costs for decision-making
- It provides targets in which efficiency can be measured
- Managers become cost-conscious
- Provides a framework for rewarding performance
4
Q
What is the formula for Sales Margin Variance?
A
(Actual sales margin - Standard sales margin) x Actual sales volume
5
Q
What is the formula for Sales Margin Volume Variance?
A
(Actual sales volume - Budgeted volume) x Standard Contribution
