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Forums › ACCA Forums › ACCA MA Management Accounting Forums › Volume variance
Misty Co’s budgetary control report for last month is as follows:
Fixed budget – 126,100 $
Flexed budget -130,855 $
Actual results – 133,580 $
What was the volume variance for last month?
A $4,755 (A)
B $2,725 (A)
C $4,755 (F)
D $2,725 (F)
Explanation: The volume variance for last month was $4,755 Adverse
The volume variance is the increase in cost resulting from a change in the volume of activity, ie the difference between the original budget and the flexed budget.
Volume variance = $126,100 – $130,855= $4,755 (A)
Why answer is A?
I think answer is C. Because when the volume of output is increasing it is favourable factor rather than adverse.
Thank you in advance for your help.
In future, if you wish for me to answer then please ask in the Ask the Tutor Forum – this forum is for students to help each other.
The volume variance is indeed favourable, and it seems that your book has made a mistake.