Which one of these would result in a favourable budget variance?

Budget cost 18k; Actual cost 16k

people the business owes money to

What is one of the reasons for an adverse cost variance

Supplier increases their prices

A common reason why many small businesses don't use budgets is that:

Budgeting can be time consuming

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Budgets Continued

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Questions 15

Answers

1
One disadvantage of a budget is:
Not actual figures
Can't be used by new businesses
Increases chances of business failure
Used as a monitoring tool
2
Which one of these would result in a favourable budget variance?
Budget cost 18k; Actual cost 16k
Actual sales 40k; Budget Sales 42k
Budget Revenue 125k; Actual Revenue 115k
Actual Gross Profit 13k; Budget Gross Profit 16k
3
Which one of these is used to help forecast sales and costs
Inventory Lists
Focus Groups
Historical Data
Supply and Demand Graph
4
Budgets are useful for:
Sacking staff
Increasing overheads above the plans
Planning to pay corporation tax
Be better prepared for changes
5
What is the Profit Variance from the below table?
18 000 Favourable
18 000 Adverse
20 000 Adverse
- 18 000 Adverse
6
What is the cost variance from the table?
7000 Adverse
7000 Favourable
7000
8000 Favourable
7
What is one of the reasons for a favourable sales variance?
Downturn in the economy
Unsuccessful marketing campaign
Increase in consumer income
New competitor joins the market
8
What is the sales variance from the table below?
20 000 Favourable
25 000 Favourable
25 000 Adverse
20 000 Adverse
9
Budgets can help to
Stop competitors entering the market
Complete Market Research
Save time
Provide clear targets
10
The Variance Formula is:
Inflows - Outflows
Planned Level - Actual Level
Fixed Costs - Total Variable Costs
Actual Level - Planned Level
11
Creditors are
people that own the company
people that owe the business money
people that work in the finance department
people the business owes money to
12
What is one of the reasons for an adverse cost variance
Supplier increases their prices
Increase in productivity
Strong exchange rate
Supplier decreases their prices
13
A common reason why many small businesses don't use budgets is that:
Budgeting can be time consuming
SMEs don't record variances
Trading is too predictable
The law only requires them for larger firms
14
What business types has unlimited liability?
Sole Trader
Social Enterprise
Public Limited Company
Private Limited Company
15
Which stakeholder is most interested in the dividends section of the P&L Account?
Government
Shareholders
Suppliers
Employees

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