A flexible budget: An activity variance is due to the difference between the level of activity used in the flexible budget and the actual level of activity

1. A flexible budget:

presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.

2. An activity variance is due to the difference between the level of activity used in the flexible budget and the actual level of activity.

False

3. Fixed costs should be included in a flexible budget even though they do not change when the level of activity changes.

True

4. An unfavorable spending variance may reflect waste as well as paying too much for inputs.

True

5. A flexible budget should not be used when making comparisons to actual results such as actual expenses.

False

6. A static planning budget is:

a budget for a single level of activity.

7. A flexible budget report should contain variable costs and mixed costs but not fixed costs.

False

8. A flexible budget cannot be used to estimate what costs should have been at a given level of activity.

False

9. Hoppy Corporation compares monthly operating results to a static budget prepared at the beginning of the month. When the actual level of activity is less than budgeted, which of the following would be true?

Variable costs would show favorable variances.

10. Comparing actual results to a budget based on the actual activity for the period is possible with the use of a:

flexible budget.