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Chapter 23: Q5RQ (page 1305)

Question: How is a flexible budget used?

Short Answer

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Answer

A flexible budget isused for preparing the flexible budget performance report.

Step by step solution

01

Definition of Budgeting

Budgeting refers to a process through which business wants to achieve their business operation goals by estimating the level of activity of a business entity. It includes the estimation of revenue and expenses.

02

Use of Flexible Budget

The business entity prepares a flexible budget for the different level of activity that falls within the relevant range and is used as the basis for preparing the performance report for a flexible budget. It is also used for understanding the overall static budget

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Most popular questions from this chapter

Question:Use the following information to prepare a standard cost income statement for Mitchell Company for 2018.

Cost of Goods Sold (at standard) \( 366,000

Direct Labor Efficiency Variance \) 19,500 F

Sales Revenue (at standard) 570,000

Variable Overhead Efficiency Variance 3,300 U

Direct Materials Cost Variance 7,200 U

Fixed Overhead Volume Variance 12,500 F

Direct Materials Efficiency Variance 2,700 U

Selling and Administrative Expenses 71,000

Direct Labor Cost Variance 42,000 U

Variable Overhead Cost Variance 1,700 F

Fixed Overhead Cost Variance 2,100 F

Question: List the variable overhead variances, and briefly describe each

Question: What are the two components of the static budget variance? How are they calculated?

Question:List the direct labor variances, and briefly describe each.

Question:Give the general formulas for determining cost and efficiency variances.
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