In 20x2, OSW Corporation budgeted its sales volume at 10,000 units. Actual volume was 9,800 units. If OSW uses the static budget to calculate variances and assuming that inventory levels are insignificant, which of the following statements is true?
A) Profits will be less than expected
B) Budgeted variable costs will be overstated compared to actual variable costs
C) Profits will be more than expected due to favorable cost variances
D) Sales managers will not receive a bonus

Question

Quizplus · Accepted Answer

Budgeted variable costs will be overstated compared to actual variable costs because the actual volume was less than the budgeted volume.

In 20x2, OSW Corporation Budgeted Its Sales Volume at 10,000