managment cost accounting, true/false

Chapter 7 Variances and flexible budgets help managers gain insights into why actual results differ from planned performance. A static budget is a budget that can be changed or altered after it is developed. Management by exception is the practice of focusing management attention on areas where performance meets expectations. Variances can be expected to vary within some normal limits, so not all variances require further investigation. The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume variance. A flexible budget enables managers to compute a more informative set of variances than a static budget does. The flexible-budget variance may be the result of inaccurate forecasting of units sold. Rate variances are the difference between actual inputs used and budgeted inputs that should have been used, multiplied by the budgeted price. The use of high-quality raw materials is likely to result in a favourable efficiency. variance and an unfavourable rate variance. If variance analysis is used for performance evaluation, managers are encouraged to meet targets using creativity and resourcefulness. Chapter 13