What is the Flex budget variance for operating income? $_____________ F or U?

What is the Volume variance for operating income? $____________F or U?

Does the combination of the flex budget variance and volume variance sum to the master budget variance for operating income? Y or N? Should it always sum to the master budget variance? Y or N?

How much of the master budget variance for Sales revenue was caused by an unanticipated increase in volume?__________________ F or U?

How much of the master budget variance for Commissions Exp. was caused by an unanticipated increase in volume?__________________ F or U?

How much of the master budget variance for Advertising Expenses was caused by an unanticipated increase in volume?__________________ F or U?

How much of the master budget variance for CGS was caused by some factor other than volume? (Hint: this is NOT a manufacturing business). $__________ F or U? What could account for this variance?

How much of the master budget variance for Sales Revenue was caused by some factor other than volume? $__________ F or U? What could account for this variance?

How much of the master budget variance for Advertising Exp. was caused by some factor other than volume? $__________ F or U? What could account for this variance?

Auditors always look at the variances between actual and budget or actual and last year. Say you were auditing this client and they gave you the following story (below). Is the story consistent with the overall pattern of variances? Which elements of the story are consistent with the explanations? Which variances are inconsistent, or left unexplained? Be sure to analyze every line item on the budget.