You learned Static (fixed) Budgets in chapter 7, Flexible Budgets and Standard Costs (favorable & unfavorable...

You learned Static (fixed) Budgets in chapter 7, Flexible Budgets and Standard Costs (favorable & unfavorable variances) in chapter 8;

Now describe an example of how an unfavorable variance between actual and budget amounts in a fixed static (master) budget can become a favorable variance in a flexible budget report.

Also, since flexible budget is more accurate in measuring performance, can company just develop flexible budget without the static budget? Why or why not?

Expert Solution

ekkarill92 answered 2 years ago

Chapter 8. Flexible Budgets, Standard Costs, and Variance Analysis 8–1 What is a static planning budget?...

Chapter 8. Flexible Budgets, Standard Costs, and Variance Analysis 8–1 What is a static planning budget? 8–2 What is a flexible budget and how does it differ from a static planning budget? 8–5 What is a revenue variance and what does it mean? 8–6 What is a spending variance and what does it mean? 8–7 What does a flexible budget enable that a simple comparison of the planning budget to actual results does not do? 8–9 What is a quantity...

Chapter 8. Flexible Budgets, Standard Costs, and Variance Analysis...answer them all. 8–7 What does a flexible...

Chapter 8. Flexible Budgets, Standard Costs, and Variance Analysis...answer them all. 8–7 What does a flexible budget enable that a simple comparison of the planning budget to actual results does not do? 8–9 What is a quantity standard? What is a price standard? 8–10 Why are separate price and quantity variances computed? 8–11 Who is generally responsible for the materials price variance? The materials quantity variance? The labor efficiency variance? 8–12 The materials price variance can be computed at what...

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We have learned about Standard costs and associated variances in this chapter. Can a favorable variance...

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HammerTime is preparing their 2019 budget. They want to look at static budgets and flexible budgets to determine which is best for them. They estimate sales/production will be between 2,000,000 and 4,000,000 boxes of nails per month. They want to be able to understand their budget variances as well. Question 1: Prepare some budgets in Excel for HammerTime. a) Show the static budget based on 3,000,000 units (boxes) produced. b) Show the flexible budget based on 2,000,000 units (boxes) produced....

Question 1 Distinguish between static and flexible budgets and explain the advantages of using a flexible...

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