Match the terms below with the following definition:

1. Activity variance

2. Planning budget

3. Flexible Budget

4. Spending variance

A) a budget created at the beginning of the budgeting period that is valid only for the planned level of activity.

B) the difference between a revenue or cost item in the flexible budget and the same item in the planning budget.

C) the difference between the actual amount of the cost and how much the cost should have been, given the actual level of activity.

D) a report showing estimates of what revenues and costs should have been, given the actual level of activity for the period.

1. B

2. A

3. D

4. C

Explanation:

1. Activity variance

B) the difference between a revenue or cost item in the flexible budget and the same item in the planning budget.

The activity variance is as a result of difference between the actual level of activity in the flexible budget to the assumed level of activity in the planning budget.

2. Planning budget

A) a budget created at the beginning of the budgeting period that is valid only for the planned level of activity.

Planning budget is a process of evaluating earnings and expenses and project their monetary intakes and outtakes for the future made by an individual or company.

3. Flexible Budget

D) a report showing estimates of what revenues and costs should have been, given the actual level of activity for the period.

Flexible budget adjusts with changes in volume and activity

4. Spending variance

C) the difference between the actual amount of the cost and how much the cost should have been, given the actual level of activity

This is unfavorable if the actual cost is greater than what the cost should have been and favorable if the actual cost is less than what the cost should have been.