50) Which of the following statements is false?

A) A static budget is prepared before the period begins and is based on the actual level of activity incurred during the period.

B) A flexible budget is an estimate of what revenues and costs should have been, given the actual level of activity for the period.

C) The variance analysis cycle includes analyzing differences between actual results and what should have occurred according to the budget.

D) The management by exception approach enables managers to focus on the most important variances while bypassing trivial discrepancies.

51) If there is a difference between the actual sales price and the planned sales price, the variance will be reflected as:

A) Only a sales-volume variance.

B) Only a sales price variance.

C) Either a sales volume variance or a selling price variance.

D) Both a sales volume variance and a selling price variance.

52) Which of the following statements is false?

A) A static budget is prepared at the beginning of the period based on planned output.

B) A flexible budget is prepared at the end of the period based on actual output for the period.

C) Flexible budgets are based on different costs per unit than used in the static budget.

D) The only difference between a static budget and a flexible budget is that a flexible budget is based on actual output rather than planned output.

53) Flexible budget variance arise due to:

A) Differences in the actual sales price, actual variable costs per unit and actual fixed costs compared to budgeted amounts.

B) Differences in the actual sales quantities, actual sales price, actual variable costs per unit and actual fixed costs compared to static budget amounts.

C) Differences in actual sales price and actual variable costs per unit compared to budget amounts. Fixed costs do not create a variance since they are constant regardless of volume.

D) Differences in the actual sales quantities compared to budgeted sales quantities.

54) To prepare a flexible budget, all costs must be classified as:

A) Direct cost or indirect cost.

B) Product cost or period cost.

C) Manufacturing cost or non-manufacturing cost.

D) Fixed cost or variable cost.

55) A favorable production volume variance indicates:

A) An underallocation of fixed overhead costs.

B) An overallocation of fixed overhead costs.

C) Production units produced are less than planned.

D) The actual fixed overhead allocation based per input unit was less than the planned fixed overhead allocation base per input unit.

56) The sales volume variance represents:

A) Difference between static budget amounts and actual amounts.

B) Difference between static budget amounts and the actual amounts for actual units sold.

C) Difference between planned sales revenue and actual sales revenue.

D) Diffence between static budget amounts and the expected amounts for actual units sold.