An unfavorable variance of 5000 in cost of goods sold is det

An unfavorable variance of $5,000 in cost of goods sold is determined by comparing the actual results (10,000 units) and the flexible budget (10,000 units). What type of variance is described? Activity variance Spending variance Revenue variance Knowledge Check 02 An unfavorable variance of $5,000 in sales is determined by comparing the flexible budget (9,000 units) and the planning budget (10,000 units). What type of variance is described? Activity variance Spending variance Revenue variance

Solution

Ans 1 B Spending Variance Explanation: Activity variance is wrong since actual units and flexible budget are same for 10000 units Revenue variance is wrong since its cost of goods sold not sales revenue So its spending variance. Ans 2 A Activity variance Explanation: since flexible budget is for 9000 units and planning budget for 10000 units there is difference in acitvity level of 10000-9000 = 1000 units Ans 3 D it eliminates the need for performing variance analysis Explanation: preparing a flexible budget is not an alternative for variance analysis Its supporting for performing variance analysis.