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Hi John,
The BPP revision kit, questions 15.38 & 15.39 appear to contradict what is taught regarding the sales volume contribution variance. In question 15.38, it includes this variance when reconciling the $5,000 adverse total from Budgeted to Actual Profit. in question 15.39, it excludes the $20,000 favourable variance from the flexed budget contribution to the actual. I’m probably misunderstanding something?
Thank you.
The sales volume variance explains the difference between the budgeted contribution and the flexed budget contribution.
When reconciling the budget contribution to the actual contribution, then the volume variance is relevant. However when reconciling the flexed budget contribution to the actual contribution it is not relevant (because of the first sentence of this reply 🙂 )
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