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 variable expenses? A)decrease in price per unit B)increase in variable cost per unit C)increase in sales volume D)increase in fixed costs

Question

Quizplus · Accepted Answer

The sales volume variance for variable expenses measures the difference between the actual variable costs and the flexible budget variable costs, based on the actual sales volume. An increase in the sales volume would result in a favorable variance, indicating that the company sold more units than expected, resulting in higher variable costs but also higher revenues. Decrease in price per unit or increase in variable cost per unit would be reflected in the flexible budget and not in the sales volume variance for variable expenses. Increase in fixed costs would be reflected in the fixed cost variance and not in the sales volume variance for variable expenses.

The Carolina Products Company Has Completed the Flexible Budget Analysis