#1
What is Variance Analysis in the context of budgeting?
A technique to identify differences between budgeted and actual financial performance
ExplanationIdentifies differences between planned and actual finances.
#2
Which type of variance is considered favorable in budgeting?
Positive variance
ExplanationPositive outcome exceeding the budget.
#3
What does the term 'Flexible Budget' refer to in variance analysis?
A budget adjusted for changes in activity levels
ExplanationBudget that accommodates activity changes.
#4
In variance analysis, what does 'Volume Variance' represent?
The difference caused by changes in production levels
ExplanationDifference due to production level changes.
#5
Which variance is calculated by comparing the actual input price with the standard input price in variance analysis?
Material Price Variance
ExplanationComparison of actual and standard input prices.
#6
What is the formula for calculating the Sales Volume Variance?
Actual Sales Quantity - Standard Sales Quantity
ExplanationDifference between actual and standard sales quantities.
#7
What is the main purpose of 'Variance Analysis' in financial reporting?
To identify and explain differences between actual and budgeted results
ExplanationIdentifies and explains budget variances.
#8
Which type of variance is calculated by comparing actual hours worked with the standard hours allowed?
Labor Efficiency Variance
ExplanationComparison of actual and standard hours worked.
#9
What is the primary purpose of conducting variance analysis?
To improve future budgeting and decision-making
ExplanationEnhancing future budgeting and decisions.
#10
In the context of variance analysis, what is 'Rate of Return Variance' related to?
Return on investment
ExplanationRelates to return on investment.
#11
What does a positive 'Efficiency Variance' indicate in manufacturing?
Efficient use of resources
ExplanationIndicates efficient resource utilization.
#12
In budgeting, what is the primary focus of a 'Zero-Based Budget'?
Justifying every expense from scratch
ExplanationJustification of expenses from scratch.
#13
What does 'Static Budget' refer to in variance analysis?
A budget that remains unchanged throughout the year
ExplanationBudget unchanged throughout the year.
#14
In the context of variance analysis, what is the formula for 'Material Price Variance'?
Actual Quantity x (Standard Price - Actual Price)
ExplanationFormula for material price variance.