In Analyzing Sales Variances, a Question Not Related to the External

question 23

Multiple Choice

In analyzing sales variances, a question not related to the external market to assist in explaining the variances is:

• A) How have changes in the market affected our sales?
• B) How many costs were allocated to each unit?
• C) Have changes in the market caused our sales mix to change?
• D) Have sales been impacted by market growth or contraction?

---

Definitions:

Lease Capitalization

The process of recording a lease as an asset and a corresponding liability on the balance sheet, reflecting the assets' use and obligation to make lease payments.

Bargain Purchase Option

An option in a lease agreement that allows the lessee to purchase the leased asset at a price significantly below its fair market value.

Capital Lease

A lease agreement that is classified as a purchase by the lessee for accounting purposes because it meets certain criteria, such as transfer of ownership by the end of the lease term.

Operating Lease

A lease agreement for property or equipment that is considered a rental and is not recorded as an asset on the company's balance sheet.