5. To help assess how wel a manager has controled costs, actual costs should be

Question

5. To help assess how wel a manager has controled costs, actual costs should be compared to what the costs should have been for the actual level of activity. 6. Fixed costs should usually be included in performance reports because fixed costs are generally controllable 7. Using a flexible budget, actual results can be compared to what costs should have been at the actual level of activity. 8. Fixed costs should not be included in a flexible budget because they do not change when the level of activity changes 9. Actual costs are determined by plugging the actual level of activity for the period into the cost formulas used in flexible budgets. 10. Fixed costs should not be ignored when evaluating how well a manager has controlled costs ifferences between the static planning budget and the flexible budget show what should have happened use the actual level of activity differed from what had been planned beca 2. An unfavorable activity variance for revenue indicates that activity was less than expected when the static planning budget was developed. variance for revenue is favorable if the revenue in the flexible budget exceeds the revenue in 13. The activity the static planning budget

Explanation / Answer

5 FALSE, lower production will show favourable cost variance 6 True, Since Fixed cost are also controllable 7 True,Actual results can be compared to what costhave been at actual level of activity 8 False, It should be included in flexible budget 9 False, Actual cost are not determined by plugging the actual level of activity for the periodinto the cost formulas used in flexible budget 10 True,Fixed cost are also controllable 11 True, flexible budget can be used to determine what costs should have been at given level of activity 12 True,unfavourable activity variance for revenue indicates that activity was less than expected when static planning budget was developed 13 True, it is favourble if actual level of activiyt for the preiod exceeds the planned level of activity

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