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Q. In the first month of production of the new battery, actual sales were 18,000 units and the sales revenue achieved
was $702,000. The budgeted sales units were 17,300.
Based on this information, which of the following statements is true?
A When the budget is flexed, the sales variance will include both the sales volume and sales price variances
B When the budget is flexed, the sales variance will only include the sales volume variance
C When the budget is flexed, the sales variance will only include the sales price variance
D When the budget is flexed, the sales variance will include the sales mix and quantity variances and the sales
price varianceCan you please help with the explanation how the answer is C
Thank you
The reason for the actual sales revenue being different from that originally budgeted is because of changes in the sales volume and changes in the selling price.
When the budget is flexed we then have the actual sales at the standard selling price and so the only reason that will be different from the actual revenue is because of changes in the selling price.
I do suggest that you watch my free lectures on flexing the budget. The lectures are a complete free course and cover everything needed to be able to pass the exam well.
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