A. This answer is incorrect. See the correct answer for a complete explanation.

B. The flexible budget variance is the difference between the actual results and the flexible budget amounts. C. The fixed overhead spending variance is the difference between actual fixed costs and budgeted fixed costs.

D. In the budgeting process, the company must determine the level of activity to use. This level of activity is also called the denominator level. The fixed overhead production volume variance is caused by the actual production level being diffeent from the production level that was used to calculate the budgeted fixed overhead rate.