ECONOMICS
BUDGETING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Labor costs go up due to overtime
|
|
|
Raw materials costs go up around the world
|
|
|
Overhead or fixed costs are lower than expected
|
|
|
Sales revenue is not as high as expected
|
Detailed explanation-1: -An unfavorable fixed overhead budget variance results when the actual amount spent on fixed manufacturing overhead costs exceeds the budgeted amount. The fixed overhead budget variance is also known as the fixed overhead spending variance.
Detailed explanation-2: -An adverse variance is where actual income is less than budget, or actual expenditure is more than budget. This is the same as a deficit where expenditure exceeds the available income.
Detailed explanation-3: -There are three primary causes of budget variance: errors, changing business conditions, and unmet expectations. Errors by the creators of the budget can occur when the budget is being compiled.
Detailed explanation-4: -The cost is more (or less) than budgeted. Budgets are prepared in advance and can only ever estimate income and expenditure. Planned activity did not occur when expected. Change in planned activity. Error/Omission.