A Company Is Analyzing Its Month-End Results by Comparing It

question 34

Multiple Choice

A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual selling price was higher than the expected price as per the static budget. This difference results in a(n) :

• A)favorable flexible budget variance for sales revenues.
• B)favorable sales volume variance for sales revenues.
• C)unfavorable flexible budget variance for sales revenues.
• D)unfavorable sales volume variance for sales revenues.

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Definitions:

Variable Costs

Financial outlays that shift proportional to the volume of production or sales, encompassing labor and material costs.

Contribution Margin

The difference between the sales revenue generated from a product or service and its variable costs.

Pretax Income

The income of a company before taxes are deducted, used to assess profitability before tax expenses are applied.

Margin of Safety

The difference between actual sales and break-even sales, measuring the risk of not reaching the break-even point.