True / False Questions
85.Evaluation of the amount of costs incurred should be based on the actual volume of activity rather than the planned volume of activity.
True False
86.A static budget is one that shows estimated revenues and costs at multiple activity levels.
True False
87.If the master budget prepared at a volume level of 10,000 units includes direct materials of $40,000, a flexible budget based on a volume of 12,000 units would include direct materials of $48,000.
True False
88.If the master budget prepared at a volume level of 20,000 units includes factory rent of $40,000, a flexible budget based on a volume of 21,000 units would include factory rent of $40,000.
True False
89.If the master budget prepared at a volume level of 10,000 units includes direct labor of $10,000, a flexible budget based on a volume of 11,000 units would include direct labor of $10,000.
True False
90.The differences between the standard and actual amounts are called variances.
True False
91.A cost variance is unfavorable if actual cost exceeds standard cost.
True False
92.The sales volume variance is the difference between sales revenue on the static budget and sales revenue on the flexible budget.
True False
93.The sales volume variance is favorable if actual sales volume is higher than the budgeted.
True False
94.When a comparison of static and flexible budgets shows an unfavorable sales volume variance, the variable cost volume variance will also be unfavorable.
True False