Revenue and Spending Variances
LEARNING OBJECTIVE 3
Prepare a report showing revenue and spending variances.
In the last section we answered the question “What impact did the change in activity have on our revenues, costs, and profit?” In this section we will answer the question “How well did we control our revenues, our costs, and our profit?”
Recall that the flexible budget based on the actual level of activity in Exhibit 9–4 shows what should have happened given the actual level of activity. If we compare this flexible budget to actual results, we compare what should have happened to what actually happened. This is done in Exhibit 9–6 .