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?

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Definitions:

Efficiency Variance

The difference between the actual and the standard amount of input (like labor or materials) needed to produce a certain amount of output, indicating the efficiency of resource use.

Variable Cost

Costs that change in proportion to the level of goods or services production, such as materials and direct labor.

Activity Range

Activity range refers to the span of levels of operational activity that a business can perform within, while maintaining efficiency and effectiveness in its processes or production.

Production Level

The quantity of goods or services produced during a specified time period.