Question

What causes the master budget variance between the amounts in the master budget and the flexible budget of a revenue​ center?

Answer 1

The master budget variance can be classified in two:

1. volume variance.-
2. flexible budget variance.- the estimated revenues and costs are not the same as the actual revenues and costs. Flexible budget variance is calculated by multiplying budgeted revenue per unit and budgeted cost per unit, by the actual output. Flexible budget variance exists if either the actual revenue per unit or cost per unit varies.