Variable costs in a flexible budget change in total with changes in activity level.

In a flexible budget, variable costs are adjusted based on actual activity levels.

In a flexible budget, fixed costs remain constant regardless of the level of activity, while variable costs change with activity levels.

In a flexible budget, total fixed costs remain constant regardless of the level of activity.

In marginal costing, fixed costs are expensed in the period incurred and not included in product costs.

In marginal costing, performance is often assessed using the contribution margin.

Standard costs are set to provide a benchmark for measuring performance and to help in variance analysis.

A favorable variance indicates that costs are lower than budgeted or revenues are higher than budgeted, improving financial performance.

Sales volume variance = (Actual Sales - Budgeted Sales) * Budgeted Price.

A flexible budget adjusts for actual activity levels, providing a more accurate comparison.

A variance report compares actual performance against budgeted performance to identify discrepancies.

Direct costs can be directly traced to a specific product or service.

Cost control primarily focuses on minimizing costs while maintaining quality.

The break-even point is where total revenue equals total costs, resulting in zero profit.

The contribution margin is calculated as sales revenue minus variable costs.

The contribution margin represents sales revenue minus variable costs, indicating how much revenue is available to cover fixed costs and contribute to profit.

Rent expense is considered a fixed cost in CVP analysis.

In marginal costing, fixed costs are treated as period costs and are charged in full to the profit and loss account.

Contribution margin is calculated as Sales minus Variable Costs.

Marginal costing considers only incremental costs, which are relevant for decision-making regarding pricing and production.

In marginal costing, fixed manufacturing costs are treated as period costs and not included in product costs.

In marginal costing, only variable manufacturing costs are included in product costs.

In marginal costing, fixed manufacturing overhead is treated as a period cost and is expensed in the period incurred.

A favorable variance indicates that actual revenues are higher than budgeted or actual costs are lower than budgeted.

A negative variance indicates worse performance than expected, meaning actual results fell short of budgeted expectations.

Material price variance is calculated as (Actual Price - Standard Price) x Actual Quantity.

The sales volume variance is calculated by taking the difference between actual and budgeted sales and multiplying it by the budgeted contribution margin.

A favorable variance indicates that actual costs are lower than budgeted or actual sales are higher than budgeted.

A negative direct labor efficiency variance indicates that workers are less efficient than expected, leading to higher labor costs.

A negative variance indicates that actual spending exceeded the budgeted amount, suggesting excessive spending.