KM MC Case #2 flex Budgets Which of the following statements are true? You may select more than one answer. 1. The variance analysis cycle involves analyzing differences between actual results and what should have occurred according to the budget. 2. Management by exception permits managers to focus on the most significant variances, and ignore immaterial differences from the budget 3. A static planning budget is suitable for planning, and is also appropriate for evaluating how well costs are controlled. 4. A flexible budget adjusts the static planning budget for actual activity. It is an estimate of what revenues and costs should have been given the actual activity of the period. Multiple Choice 0 O True statements include #1, #2, and #4 0 True statements include #1, #2, #3, and $4 0 True statements include #1, and #2 0 Only statement #1 is correct. KM Check all that apply The following statements are based upon your knowledge of the budgeting process. Please check only those answers that are TRUE. Check All That Apply If the actual cost incurred for the Theatre's rent is greater than the amount in the flexible budget, the variance is unfavorable. O The number of cost drivers used to prepare a budget is limited to three. O If a company's actual net operating income is greater than net income in the flexible budget, the total overall revenue and spending variance will be favorable. O If a variance is favorable, and significant in amount, it may be ignored