Which isn't an advantage of budgeting?

Increased flexibility in decision making

Which of these is likely to result in an adverse overhead variance?

Management get a surprise pay increase

Which of these would result in a favourable budget variance?

Budget cost 18k; Actual cost 16k

An estimate of income and expenditure over a period of time

Which of these is a problem with setting budgets?

Can lead to a short-term fix not a long term solutions

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Variance Analysis

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A Quiz to introduce the concept of Variance Analysis

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Questions 10

Answers

1
Which isn't an advantage of budgeting?
Motivates staff
Establishes priorities and sets targets
Increased flexibility in decision making
Improves efficiency
2
Which of these isn't a way to describe a variance?
Positive
Favourable
Profitable
Adverse
3
Which of these is likely to result in an adverse overhead variance?
Capital spending falls short of budget
Management get a surprise pay increase
Customers respond to a price cut
Actual gross profit margin is 5% less than budget
4
Which of these are types of budgeting?
Last years and zero-based
Historical and new business
Variance analysis and Historical
Historical and zero-based
5
Which of these would result in a favourable budget variance?
Budget revenue 125k; Actual revenue 115k
Budget cost 18k; Actual cost 16k
Actual sales 40k; Budget sales 42k
Actual gross profit 13k; Budget gross profit 16k
6
The budget said that 200 units will be sold at £15 each; sales were £4500 what's the variance?
£1,200 (F)
£3,000 (A)
£1,200 (A)
£3,000 (F)
7
Budgeted profit is £25,000 but Revenue is £80,000 and costs £45,000. Whats the profit variance?
£25,000 (F)
£35,000 (F)
£20,000 (A)
£10,000 (F)
8
What is a budget?
How much money a business has
How the business will be investing it's money over time
An estimate of income and expenditure over a period of time
Profit made by the business over time
9
Which of these variances should help a firm achieve a higher net profit than expected?
Favourable cost variance
Favourable cash flow variance
Adverse revenue variance
Adverse cost variance
10
Which of these is a problem with setting budgets?
Can lead to a short-term fix not a long term solutions
You can't set targets from it
Decreases efficiency
De-motivates staff

Variance Analysis Flashcards | StudBud