ECONOMICS

Detailed explanation-1: -Variable costing is a concept used in managerial and cost accounting in which the fixed manufacturing overhead is excluded from the product-cost of production. The method contrasts with absorption costing, in which the fixed manufacturing overhead is allocated to products produced.

Detailed explanation-2: -A flexible budget is prepared after the month ends, and adjusts the static–or original–budget by substituting the actual level of output. A flexible budget aims to determine how much money it costs–in terms of both overhead and direct production costs–to produce each unit of output or product.

Detailed explanation-3: -A flexible budget is a budget that adjusts to a company’s activity or volume levels. Unlike a static budget, which doesn’t change from the amounts established when the company creates the budget, a flexible budget continuously changes with a business’ cost variations.

Detailed explanation-4: -The flexible budget variance measures the difference between the actual variable overhead costs and the flexible budget for variable overhead costs. It is also called the budget variance because it measures the difference between the budgeted amount that must be incurred versus the actual amount incurred.