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Hello Sir, I hope you’re doing good.
Could you please explain me why the below statement is said to be ‘True’ by BPP kit?(2) In every variance reporting system with flexible budgets that compares budgeted and actual profit, there must be a sales volume variance.
There could be a production volume variance too, right? or is it that we assume sales=production volume ALWAYS
There will always be a sales volume variance if the actual sales volume is different from the budgeted sales.
There is never a production volume variance. This is because the sales volume variance explains what the standard profit should be for the actual sales. So effectively the production costs are then flexed for the actual production.
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