P1 Exam Dumps : Management Accounting

The budgeted income statement and the budgeted cash flow statement only.

The budgeted income statement and the budgeted statement of financial position only.

The budgeted income statement and budgeted capital expenditure only.

The budgeted income statement, the budgeted statement of financial position and the budgeted cash flow statement only.

A fixed budget will provide meaningful control information when actual activity differs from budget and variable costs are significant.

If actual sales revenue is compared to a fixed budget it is possible to tell whether a favourable sales variance is due to an increase in units sold or an increase in sales price.

If sales volumes were well above budget, adverse variable cost variances will probably be reported, against the fixed budget, since more variable costs have to be incurred to support the higher level of activity.

Reporting against a fixed budget tells management nothing about the efficiency of operations.

If a flexible budget is prepared then the budget variances calculated will provide a better indication of performance since actual results will be compared against an appropriate benchmark.

The fixed budget however provides more insight into actual performance.