Question Details

A management process to focus on significant variances 



1.Presented below are terms preceded by letters a through j and followed by a list of definitions 1 through
10. Enter the letter of the term with the definition, using the space preceding the definition.
1. Volume
variance
The difference between the total budgeted overhead cost
and the overhead cost that was allocated to products using the
predetermined fixed overhead rate.
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2. Manag
ement by
exception
A planning budget based on a single predicted amount of sales
or production volume; unsuitable for evaluations if the actual
volume differs from the predicted volume.
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3. Cost
variance
Preset costs for delivering a product, component, or service
under normal conditions.
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4. Qu
antity
variance
A process of examining the differences between actual and
budgeted sales or costs and describing them in terms of the
amounts that resulted from price and quantity differences.
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5. Flexible
budget
The difference between actual and budgeted sales or cost
caused by the difference between the actual price per unit and the
budgeted price per unit.
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6. Price
variance
A budget prepared based on predicted amounts of revenues
and expenses corresponding to the actual level of output.
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7. Fixed
budget
The difference between actual and budgeted cost caused by the
difference between the actual quantity and the budgeted quantity.
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8. Varianc
e analysis
The combination of both overhead spending variances
(variable and fixed) and the variable overhead efficiency
variance.
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9. Standar
d costs
A management process to focus on significant variances and
give less attention to areas where performance is close to the
standard.
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10. Con
trollable
variance
The difference between actual cost and standard cost, made up
of a price variance and a quantity variance.
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