A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual selling price was higher than the expected price as per the static budget. This difference results in a(n):
A)favorable flexible budget variance for sales revenues.
B)favorable sales volume variance for sales revenues.
C)unfavorable flexible budget variance for sales revenues.
D)unfavorable sales volume variance for sales revenues.

Question

Quizplus · Accepted Answer

A higher selling price than expected would result in a favorable flexible budget variance for sales revenues, as the flexible budget would have taken into account the higher selling price and forecasted higher revenues accordingly. The sales volume variance, on the other hand, compares the actual number of units sold to the expected number of units sold, so it is not relevant to the scenario described.

A Company Is Analyzing Its Month-End Results by Comparing It