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The following statements have been made about flexible budgets
1.flexible budgets enable proper comparison to be made between actual and expected revenues and costs
2.In every variance reporting system with flexible budgets that compares budgeted and actual profit,there must be sales volume variance
Which of these statements are true?
ANSWER :both statements are trueSir i know 1st statement is correct but the 2nd statement,is it a must to have sales volume variance??
There will only be a sales volume variance if the actual sales are different from the budgeted sales.
I suppose you could argue that there will always be a sales volume variance but that it could equal zero (which it would if actual sales were equal to budget sales) 🙂
It is a very poor question.
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