Comparing the master budget with the flexible budget creates a:
A)quantity variance.
B)volume variance.
C)spending variance.
D)price variance.

Question

Quizplus · Accepted Answer

The difference between the master budget (prepared based on a certain level of activity) and the flexible budget (prepared based on actual level of activity) is called a volume variance. This variance helps the management to understand how changes in activity levels affect the overall budgeted amounts. The other options given (quantity variance, spending variance, price variance) are all related to specific types of variances that are calculated as part of the overall budgeting process.

Comparing the Master Budget with the Flexible Budget Creates A