Week 8

Question 1

What is variance?

Answer 1

It is the deviation between actual and planned
(budgeted) performance.

Question 2

What is static budget variance?

Answer 2

Variance between actual performance and planned performance.

Question 3

What can static budget variance be broken down into?

Answer 3

SBV for revenues and SBV for costs. And can be further broken down into flexible budget variance and sales volume variance.

Question 4

What is sales volume variance?

Answer 4

The difference between a flexible budget performance and the corresponding static budget performance.

Question 5

What does SVV for revenues capture?

Answer 5

Captures the profit effect of changed sales volume when other standards had all been achieved.

Question 6

What does FBV for revenues capture?

Answer 6

Captures the profit effect of changed selling price per output unit.

Question 7

What does SVV for costs capture?

Answer 7

Captures the profit effect of sales volume changes, when other standards had all been achieved.

Question 8

What does FBV for costs capture?

Answer 8

Captures the profit effect of changed costs per output unit.