The following statements are based upon your knowledge of the budgeting process.
ID: 2526697 • Letter: T
Question
The following statements are based upon your knowledge of the budgeting process. Please check only those answers that are TRUE.
A-If the actual cost incurred for the Theatre's rent is greater than the amount in the flexible budget, the variance is unfavorable.
BThe number of cost drivers used to prepare a budget is limited to three.
C-If a company's actual net operating income is greater than net income in the budget, the total overall revenue and spending variance will be favorable.
D-If a variance is favorable, and significant in amount, it may be ignored.
Explanation / Answer
If the actual cost incurred for the Theatre's rent is greater than the amount in the flexible budget, the variance is unfavorable. if a company's actual net operating income is greater than net income in the budget, the total overall revenue and spending variance will be favorable.