The cellular phone division of Stegall Company had budgeted sales of $950,000 and actual sales of $900,000. Budgeted expenses were $600,000 while actual expenses were $550,000. Based on this information, a report prepared for the manager of this profit center would show:
A) A favorable revenue variance.
B) A favorable cost variance.
C) Both a favorable revenue variance and a favorable cost variance.
D) None of these.

Question

Quizplus · Accepted Answer

The report would show a favorable cost variance because actual expenses ($550,000) were lower than budgeted expenses ($600,000). The revenue variance is unfavorable because actual sales ($900,000) were lower than budgeted sales ($950,000).

The Cellular Phone Division of Stegall Company Had Budgeted Sales