COST ACCOUNTING
FLEXIBLE BUDGETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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of inflation
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sales price/cost per unit and the fixed cost was different than planned
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actual number of units sold differs from the amount in the static budget
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Detailed explanation-1: -The sales-volume variance is the difference between a flexible-budget amount and the corresponding static-budget amount. This is because it arises solely from the difference between the actual quantity sold and the quantity of products expected to be sold in the static budget.
Detailed explanation-2: -A product’s sales volume variance is calculated by multiplying the difference between its actual and budgeted sales quantities by the average profit, contribution, or revenue per unit. The metric is a gauge of sales performance based on the financial impact of either exceeding or failing to meet your budgeted sales.
Detailed explanation-3: -The sales volume variance is the difference between the actual and expected number of units sold, multiplied by the budgeted price per unit. The formula is: (Actual units sold-Budgeted units sold) x Budgeted price per unit. = Sales volume variance.
Detailed explanation-4: -Sales volume variance arises solely because the quantity actually sold differs from the quantity budgeted to be sold.
Detailed explanation-5: -Answer and Explanation: Sales volume variance is the difference between the flexible budget and the static budget. A flexible budget is based on the standard cost and actual results while a static budget is based on the standard cost and standard cost.