Flexible-budget variances and sales-volume variances To calculate an FB for ex post control purposes, students should work backwards. First, determine the number of actual outputs (or actual units of the revenue/cost driver. Then, workout what costs and revenues should have been for that exact number of outputs. The FBV is the difference between what we have actually spent (received) and what we should have spent received) for the actual number of outputs. If the FB is based on actual outputs (units of revenue/cost driver, which are not known until the end of the period, how can it be a budget Answer The FB shows the costs that should have been incurred (i.e. the budgeted costs) to achieve the actual output level. The FB is the budget we would have made at the beginning of the period if we had perfectly predicted the actual number of outputs Can fixed costs have a sales-volume variance (SVV)? If the expected (static budget) and actual (FB) number of outputs are in the same relevant range, then budgeted fixed costs are the same at both levels, and there will be no SVV for fixed costs. The SVV arises only because expected quantities of revenue and cost drivers used to develop the static budget do not equal the actual quantities of revenue and cost drivers used to develop the FB.
