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Variance analysis
The flexible budget
The budget re-stated at the actual level of activity, so cost variances are judged against what the costs should have been at that volume, not at the planned volume.
Owned by: Senior analystTest band: Senior analyst
In practice
If sales were 20% over plan, variable costs should be too. Compare against the flexed budget or every good month looks like a cost overrun.
The kind of thing the test asks
- Volume came in 20% above plan and variable costs are 15% over budget. Against a flexed budget, variable costs are…
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