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Hi,
I wanna ask if the answer “adverse” is correct or not.
Cause as per I understand following the lectures, if actual sales volume at original budget is higher then actual sales volume at revised budget. It should be favorable.
But this question, showing the answer if adverse. Could you please advice?
It is a planning variance
Difference between revised and budget
revised 17500 * 1.50
budget 20000 * 1.50 which equals 3750 Adverse
The original budget was forecasting a too high volume
Is it because we are looking it differently if comparing
original budget and revised budget
vs
Original std cost and revised std cost
I think you are not understanding
If for example:
Actual 16000 * 1.50 24000
revised 17500 * 1.50 26250 which equals 2250 Adverse
budget 20000 * 1.50 30000 which equals 3750 Adverse
Total 6000A
The actual volume we achieved was a much lower share of the market/volume than we revised it to be.
The original budget was forecasting a too high volume we forecasted too high a size of the market/volume
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