A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the month, the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget. This difference results in a (n)

Answer: D. favorable flexible budget variance for variable costs

Explanation:

Here is the complete question:

A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget. This difference results in a (n)

A. favorable sales volume variance for variable costs

B. unfavorable sales volume variance for variable costs

C. unfavorable flexible budget variance for variable costs

D. favorable flexible budget variance for variable costs

E. None of the above

Answer:

A flexible budget is a budget which is allowed to adjust due to change in assumptions that were used to create the budget at the management's planning process. On the other hand, a static budget, remains the same even when there are vital changes from the assumptions that were made during the planning process.

In a situation whereby the actual variable cost per unit isn't up to or. less than budgeted variable cost per unit, this will give a flexible budget variance that will be favourable for the variable cost.