The Carolina Products Company has completed the flexible budget analysis for the 2^nd quarter, which is as given below. Which of the following would be a correct interpretation of the sales volume variance for sales revenues? A)increase in price per unit B)increase in sales volume C)increase in variable expense per unit D)increase in fixed costs

Question

Quizplus · Accepted Answer

The sales volume variance measures the effect of the difference between actual and budgeted sales volumes on sales revenue. An increase in sales volume would result in a favorable sales volume variance, indicating higher sales revenue than budgeted. The other options would result in unfavorable variances for either variable expense per unit or fixed costs or both. An increase in the price per unit would be reflected in a favorable revenue price variance.

The Carolina Products Company Has Completed the Flexible Budget Analysis