Use the Information Below to Answer the Following Questions -Refer to the Table Above

question 29

Multiple Choice

Use the information below to answer the following questions. $\begin{array}{llc}&\text { Flexed Budget for April }&\text { Actual for April }\\\text { Output } & 40,000 \text { units } & 40,000 \text { units } \\\text { Sales } & \$ 500,000 & \$ 400,000 \\\text { Raw materials } & \$ 100,000 & \$ 88,000 \\\text { Labour } & \$ 250,000 & \$ 180,000 \\\text { Overheads } & \$ 325,000 & \$ 375,000\end{array}$
-Refer to the table above. The adverse (unfavourable) sales variance of $100,000 is best explained by:

• A)a decrease in price of the units sold.
• B)the sales manager failing to sell the budgeted units.
• C)an increase in expenses.
• D)none of the above.

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Definitions:

Cash Operating Expenses

Expenditures that a company makes in cash for the day-to-day running of its business.

Capital Budgeting

The process of planning and managing a company's long-term investments in assets and projects based on their potential to generate earnings and cash flow.

Incremental Sales

This refers to the additional revenue generated from a new business strategy or marketing effort beyond existing sales.

Operating Expenses

Recurring expenses related to the normal business operations, such as wages, rent, and utilities, but not including cost of goods sold.