The Carolina Rubber Products Company has completed the flexible budget analysis for the second quarter,which is as given below.
-Which of the following would be a correct interpretation of the sales volume variance for variable expenses?

Question

The Carolina Rubber Products Company has completed the flexible budget analysis for the second quarter,which is as given below.  
-Which of the following would be a correct interpretation of the sales volume variance for variable expenses?

Quizplus · Accepted Answer

The sales volume variance for variable expenses is calculated by comparing the actual level of sales with the flexible budget level of sales, using the actual variable cost per unit. If the actual sales volume is higher than the flexible budget level of sales, the sales volume variance for variable expenses will be favorable, indicating that the company sold more units than it had planned for and therefore incurred lower variable costs per unit. Thus, an increase in sales volume would result in a favorable variance.

The Carolina Rubber Products Company Has Completed the Flexible Budget