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

Question

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

Quizplus · Accepted Answer

The sales volume variance for variable costs measures the effect of the difference between actual sales volume and budgeted sales volume on variable costs. In this case, the flexible budget analysis shows that actual sales volume was greater than budgeted sales volume by 200 units, which should have led to a decrease in variable costs. Therefore, an increase in sales volume (choice C) is the correct answer. The other choices do not relate to the sales volume variance for variable costs.

The Kentucky Foam Products Company Completed the Flexible Budget Analysis