Question

A spending variance is the difference between the amount of the cost in the static planning budget and the amount of the cost in the flexible budget. True or false?

Answer 1

Answer:

False

Explanation:

Spending Variance is best described as the rate of difference in actual and budgeted quantum. It is the difference calculated using standard rate, actual rate and actual quantum of activity.

As, for labor spending variance = (Standard Rate - Actual rate per hour) $\times$ Actual Labor hours.

For Material spending variance = (Standard price per unit - Actual Price per unit) $\times$ Actual quantity used.

Thus, it is never the difference between total cost between static and flexible budget.

Therefore, the stated statement is False.