Question

practice: define the variance analysis cycles in context wi... 0:20:05
12.__________ time is the amount of time a product spends waiting to be worked on.
respond to the following based on your reading.

1. what is a static planning budget?
2. what is a flexible budget and how does it differ from a static planning budget?
3. what does a flexible budget performance report do that a simple comparison of budgeted to actual results does not do?
4. how does a flexible budget based on two cost drivers differ from a flexible budget based on one cost driver?
5. what is quality of conformance?
6. describe the operation performance measures to compute the cost of quality.

Explanation:

1. The term refers to the idle time a product waits before processing.
2. A static planning budget is fixed for a single activity level.
3. A flexible budget adjusts to actual activity levels, unlike static budgets.
4. It separates activity level variances from spending variances.
5. It uses two cost drivers to allocate costs, offering more accuracy.
6. It measures how well a product meets design specifications.
7. These include prevention, appraisal, internal failure, and external failure costs.

Answer:

1. Wait
2. A budget prepared for a single planned activity level.
3. A budget adjusted to actual activity levels; differs by adapting to volume changes.
4. It isolates the effect of activity level differences from cost control.
5. It incorporates two cost drivers to better match cost behavior.
6. The degree to which a product conforms to its design standards.
7. Prevention costs, appraisal costs, internal failure costs, external failure costs.