1. Which of the following statements is not correct? a. Unfavorable variance occurs when actual costs are lower than budgeted costs. b. The labels "favorable" and "unfavorable" should not be considered as evaluations of performance without additional investigation. An important part of variance analysis is to understand what might cause a difference between actual and budgeted results. Variance = Actual result - Budgeted performance. e. All are correct 2. With a planned volume of 15,000 units, the master budget includes variable costs of $450,000 and fixed costs of $350,000. If the actual volume is 12,000 units, what is the amount of the total costs in the flexible budget? a. $490,000 b. $560,000 c. $650,000 d. $710,000 e. None of the above 3. Which of the following is correct regarding sales activity variance? a. Sales activity variance is driven by the volume difference between actual results and flexible budget. b. Variable costs are expected to decrease when volume is higher than planned. c. Sales activity variance is the difference between operating profit in the master budget and operating profit in flexible budget. d. Sales activity variance can be seen on the master budget's profit-volume line. e. None of the above 4. Which of the following statements is correct? a. Marketing and administrative cost variances are treated differently from production cost variances. b. The fixed production cost variance is the difference between flexible budget and master budget costs. c. Variable cost variances are output variances. d. Profit variance analysis shows the causes of differences between budgeted profits and the actual profits earned. e. None of the above