Questions
· 9–1 What is a static planning budget?
· 9–2 What is a flexible budget and how does it differ from a static planning budget?
· 9–3 What are some of the possible reasons that actual results may differ from what had been budgeted at the beginning of a period?
· 9–4 Why is it difficult to interpret a difference between how much expense was budgeted and how much was actually spent?
· 9–5 What is an activity variance and what does it mean?
· 9–6 What is a revenue variance and what does it mean?
· 9–7 What is a spending variance and what does it mean?
· 9–8 What does a flexible budget performance report do that a simple comparison of budgeted to actual results does not do?
· 9–9 How does a flexible budget based on two cost drivers differ from a flexible budget based on a single cost driver?
· 9–10 What assumption is implicitly made about cost behavior when a static planning budget is directly compared to actual results? Why is this assumption questionable?
· 9–11 What assumption is implicitly made about cost behavior when all of the items in a static planning budget are adjusted in proportion to a change in activity? Why is this assumption questionable?
Multiple-choice questions are provided on the text website at