23. If activity is higher than expected, total variable costs should be higher t

Question

23. If activity is higher than expected, total variable costs should be higher than expected. If activity is lower than expected, total variable costs should be lower than expected. True False 24. When a flexible budget is used in performance evaluation, actual costs are compared to what the costs should have been for the actual level of activity during the period rather than to the tatic planning budget True) False 25. An activity variance is due solely to the difference between the level of activity assumed in the planning budget and the actual level of activity used in the flexible budget True False

Explanation / Answer

Answers

The statement is TRUE

Total variable cost changes with the change in the level of activity. Hence, if activity is higher than expected, total variable cost will be higher than expected and vice-versa.

The given statement is TRUE.

Under flexible budget, standard costs for actual output are first obtained and then the same are compared with actual results for variance calculation and analysis.

The given statement is also TRUE

Activity Variance is the difference between Planning Budget activity and Actual Level of activity used in the Flexible Budget.

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