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

Question

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

Quizplus · Accepted Answer

The sales volume variance is the difference between the flexible budget amount and the actual sales revenue, which can be calculated as flexible budget amount - actual sales revenue. In this case, the flexible budget amount for sales revenue is $2,605,000 and the actual sales revenue is $2,430,000. So, the sales volume variance is $175,000 unfavorable, which means the actual sales volume is less than the expected sales volume in the flexible budget. The reason for the sales volume variance could be a decrease in sales volume or decrease in selling price per unit, or a combination of these factors. However, since the answer choices only include one factor, the best choice is B - increase in sales volume, which is the opposite of the actual situation. The other choices (A, C, D) do not explain the sales volume variance.

The Carolina Rubber Products Company Completed the Flexible Budget Analysis