Asked by
Nicole Ieraci
on Dec 16, 2024
Verified
A flexible budget cost variance can be decomposed into a quantity variance and a price variance.
Flexible Budget Cost Variance
The difference between actual costs and the costs allocated in the flexible budget, which adjusts based on actual levels of activity.
Quantity Variance
A variance that is computed by taking the difference between the actual quantity of the input used and the amount of the input that should have been used for the actual level of output and multiplying the result by the standard price of the input.
Price Variance
The difference between the actual cost of a good or service and its budgeted or standard cost.
- Compute and elucidate discrepancies in direct materials, direct labor, and production overhead costs.
- Explore the reasons behind and the consequences of positive and negative variances.
Verified Answer
UC
Learning Objectives
- Compute and elucidate discrepancies in direct materials, direct labor, and production overhead costs.
- Explore the reasons behind and the consequences of positive and negative variances.