Flashcards in Module 10 Deck (12):
Costs that differ among alternative courses of action.
Avoidable Costs vs Unavoidable Costs?
Avoidable will be avoided if outsourcing decision accepted. Unavoidable will be incurred regardless of the decision.
When actual expense is greater than budget, or if actual revenue is lower than budget.
When actual expense is lower than budget, or if actual revenue is higher than budget.
What is required to flex a budget?
Actual level of sales need to be known.
What does the flex budget show?
Shows the budgeted revenues and expenses for the actual sales level achieved. What should rev + exp have been at this sales unit level?
Calculate Overall Budget Variance?
Actual budget - budget
Calculate Sales Volume Variance?
Flexed profit - budgeted profit
Calculate Total Flex Budget Variance?
Actual profit - flexed profit
Why would sales volume variance occur?
Lower price, due to lower demand for the product, more competitors.
Why would variable costs fall?
Quality of resources not as high.