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I didn’t understand what was the point in doing sales volume variance as it was just telling that why profit was different between flexed and fixed budget. It didn’t had any impact on actual profit because in variance analysis We compare actual results with flexed results . We dont compare actual with fixed budget.
Only impact on actual profit was due to sales price variance as we have sold inventory at cheaper rates….. resulting in less profit
But we do compare the actual profit with the budget profit!!!
The managers of the company will want to know why the actual profit is different from the budgeted profit, and the most obvious reason is that the sales were higher or lower, which is the sales volume variance.
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