Flexed budget.

You don’t need to type out the question (that would be in breach of copyright anyway) and neither do you need to put a link!
I have all the past exams and so all you need to do is give the number of the question and which exam 🙂

Flexing the budget means that the material cost was expected to be 300/500 x $10,000 = $6,000. They have actual spent more than $6,000 ($6,500) and yet suppliers have lower their prices, so they should have spent less. So there is poor performance on materials.

So the answer has to be A or C

Flexing the sale revenue means that the revenue should have been 300/500 x $50,000 = $30,000. The actual revenue was only $28,500. However, since selling prices in the market fell by 10% our managers have done well since the fall in revenue is less than 10%. So there is not poor performance on sales price.

So the answer has to be A.

(Sales volume fell from 400 last year to 300 this year, which is a fall of 25%. This is the same as the market and so it isn’t poor performance.)

You are welcome 🙂