Cost Accounting with 100% verified answers

Static Budget - also called a master budget, is based on the budgeted price and budgeted level of output. Also, the static budget is prepared at the beginning of a period Static Budget variance - Is the difference from actual output and pricing compared to the budgeted output and pricing A favorable variance results when? - is when the actual revenue is greater than the budgeted amounts or actual costs are less than budgeted costs An unfavorable variance results when? - if actual revenue is less than budgeted revenue or when costs are greater than budgeted costs What is the 3rd budget that is created? - A Flexible Budget What is a flexible budget? - A flexible budget adjusts the master budget using actual output to recalculate revenue and variable costs for the budget period. Flexible Budgets compare? - Actual output with budgeted prices The three steps for creating a flexible budget is as follows? - 1. Identify the actual output quantity 2. calculate flexible budget revenues (budgeted selling price X actual quantity). 3.Calculate flexible budget costs (Budgeted per unit var cost X actual quantity plus fixed costs) Flexiable budgets? - accomodate changes in activity levels