An Unfavorable Sales Volume Variance in Operating Income Suggests A(n)

question 98

Multiple Choice

An unfavorable sales volume variance in operating income suggests a(n) :

• A)increase in number of actual units sold.
• B)decrease in number of actual units sold when compared to the expected number of units sold.
• C)increase in variable expenses per unit.
• D)decrease in fixed costs.

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Definitions:

Direct Materials Purchases Variance

Direct materials purchases variance analyzes the difference between the actual cost of materials purchased and the budgeted cost, impacting budgeting and cost control.

Variable Overhead

Those overhead costs that vary in total directly and proportionately with changes in production or activity level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on a standard rate.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected (budgeted) cost of these materials.