If a company plans to sell 24,000 units of product but sells 30,000, the most appropriate comparison of the cost data associated with the sales will be by a budget based on
A) the original planned level of activity.
B) 27,000 units of activity.
C) 30,000 units of activity.
D) 24,000 units of activity.

Question

Quizplus · Accepted Answer

Since the company sold 30,000 units instead of the originally planned 24,000 units, it would be most appropriate to compare the cost data to a budget based on the actual level of activity, which is 30,000 units. This will provide a more accurate representation of the costs incurred during the period. Therefore, the best option is to compare the cost data to a budget based on 30,000 units of activity.

If a Company Plans to Sell 24,000 Units of Product