A process of examining the differences between actual and budgeted costs and describing them in terms of the amounts that resulted from price and quantity differences is called:
A) Cost analysis.
B) Flexible budgeting.
C) Variable analysis.
D) Cost variable analysis.
E) Cost variance analysis.

Question

Quizplus · Accepted Answer

Cost variance analysis is the process of examining the differences between actual and budgeted costs and describing them in terms of the amounts that resulted from price and quantity differences. It involves calculating and analyzing the different cost variances, such as material price variance and labor efficiency variance, to understand the reasons for the deviations from the budget and to make adjustments for better cost control in the future. Choice A, cost analysis, is a broader term that includes not only variance analysis but also other cost-related activities such as cost accounting and cost management. Choice B, flexible budgeting, is a technique that involves creating budgets that adjust to changing levels of activity, but it does not necessarily involve cost variance analysis. Choices C and D are not commonly used terms in the context of cost analysis.

A Process of Examining the Differences Between Actual and Budgeted