Author Question: Which of the following elements are used in calculating revenue in a flexible budget? A) budgeted ... (Read 61 times)

jrubin · **on:** Jul 5, 2018

Which of the following elements are used in calculating revenue in a flexible budget?

A) budgeted selling price and actual quantity of output
B) actual selling price and budgeted quantity of output
C) budgeted selling price and budgeted quantity of output
D) actual selling price and actual quantity of output

Question 2

Explain the difference between a static budget and a flexible budget. Explain what is meant by a static budget variance and a flexible budget variance.

What will be an ideal response?

wuly · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Answer: A

Answer to Question 2

Answer: A static budget is one based on the level of output planned at the start of the budget period. A flexible budget calculates budgeted revenue and budgeted costs based on the actual output in the budget period. The only difference between the static budget and the flexible budget is that the static budget is prepared for the planned output, whereas the flexible budget is prepared based on the actual output.

A static budget variance is the difference between the actual results and the corresponding budgeted amounts in the static budget. A flexible-budget variance is the difference between an actual result and the corresponding flexible-budget amount based on the actual output in the budget period.