Asked by matheus castro on Jul 11, 2024
Verified
To help assess how well a manager has controlled costs, actual costs should be compared to what the costs should have been for the actual level of activity.
Actual Costs
Expenses that have been incurred, as opposed to estimated or standard costs.
Actual Level
Refers to the current, real-life status or quantity of a specific variable or condition, as opposed to projected or theoretical levels.
Controlled Costs
Expenses that a company can manage or influence directly.
- Understand the concept and purpose of a flexible budget and its comparison to static budgets.
Verified Answer
DS
david startJul 13, 2024
Final Answer :
True
Explanation :
This statement is true. Comparing actual costs to what the costs should have been at the actual level of activity is known as a cost variance analysis, which helps managers identify where they may have overspent or underspent on certain costs. This information can be used to make adjustments and improve cost control in the future.
Learning Objectives
- Understand the concept and purpose of a flexible budget and its comparison to static budgets.