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Chapter 23: Q3RQ (page 1305)

Question: What is a static budget performance report?

Short Answer

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Answer

The reportreflects the difference between theactual activity level achieved by the business entity and thelevel of activity stated in the static budget.

Step by step solution

01

Definition of Performance Report

The performance report is the report that shows the achievement of the business entity by making a comparison between the actual results of the business activities with the budget prepared by the business entity.

02

Static budget performance report

The performance report shows the business entity's information on the static budget and the actual operating results. It is done to determine the static budget variance. A static budget is prepared for only one level of activity. The deviation from the level established in the static budget is used to determine the business performance.

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Most popular questions from this chapter

Matching terms

Match each term to the correct definition.

Terms Definitions

a. Flexible budget

b. Flexible budget variance

c. Sales volume variance

d. Static budget

e. Variance

1. A summarized budget for several levels of volume thatseparates variable costs from fixed costs.

2. A budget prepared for only one level of sales.

3. The difference between an actual amount and thebudgeted amount.

4. The difference arising because the company actuallyearned more or less revenue, or incurred more or lesscost, than expected for the actual level of output.

5. The difference arising only because the number ofunits actually sold differs from the static budget units.

Question:Match the variance to the correct definition.

Variance Definition

2. Cost variance

3. Efficiency variance

4. Flexible budget variance

5. Sales volume variance

6. Static budget variance

a. The difference between the expected results in the flexible budget for the actual units sold and the static budget.

b. The difference between actual results and the expected results in the flexible budget for the actual units sold.

c. Measures how well the business keeps unit costs of material and labor inputs within standards.

d. The difference between actual results and the expected results in the static budget.

e. Measures how well the business uses its materials or human resources

Identifying the benefits of standard costs

Setting standards for a product may involve many employees of the company. Identify some of the employees who may be involved in setting the standard costs, and describe what their role might be in setting those standards.

List the eight product variances and the manager most likely responsible for each.

Question: How is a flexible budget used?
See all solutions

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