Spending variances are computed by taking actual results minus the Blank______ budget.
Question
Spending variances are computed by taking actual results minus the Blank______ budget.
Solution
Fill in the Blank
The correct term to complete the sentence is "flexible".
Explanation
Spending variances are computed by taking actual results and subtracting the flexible budget. A flexible budget adjusts for the actual level of activity, providing a more accurate benchmark for variance analysis compared to a static budget. This calculation helps businesses identify differences between expected and actual spending based on the activity level for a given period.
Understanding the flexible budget is crucial in managerial accounting as it aids in performance evaluation and helps managers make informed decisions about areas that may need cost control or adjustments.
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