What May Cause a Sales Volume Variance for Fixed Expenses

question 150

Multiple Choice

What may cause a sales volume variance for fixed expenses?

• A)Insurance costs on the factory rise unexpectedly during the year due to a crisis in the insurance industry.
• B)The union calls for a strike of factory workers and temporary workers are hired to fill in for the striking employees.
• C)The lease on the manufacturing facility is renegotiated and the lease payments increase during the year.
• D)The number of units actually sold falls within a different relevant range than the static budget sales volume.

Understand and differentiate between variable, fixed, and mixed costs, including their behavior per unit and in total within the relevant range.

Evaluate the impact of sales volume changes on contribution margin and net income through the calculation of the degree of operating leverage.

Compare and contrast income calculations under absorption and variable costing, understanding the implications on financial reporting and decision making.

Interpret financial data to assess the company's operational efficiency and market position, employing concepts like sales mix and selling price per composite unit.

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Definitions:

Informational Influence

Informational influence occurs when individuals conform to what they believe is the correct behavior, based on the information obtained from others, often in uncertain situations.

Normative Influence

The impact of the social norms and expectations of others on an individual's behavior, often leading to conformity.

Deindividuation

A psychological state where individuals lose self-awareness and a sense of individuality, often resulting in uninhibited or deviant behavior, usually within a group context.

Lost Anonymity

The situation in which an individual's identity becomes known after previously being unknown or unacknowledged.