The Static-Budget Variance Will Be Favorable, When ________

question 130

Multiple Choice

The static-budget variance will be favorable, when ________.

• A) budgeted unit sales are more than actual unit sales
• B) the actual contribution margin is less than the static-budget contribution margin
• C) the actual sales mix shifts toward the less profitable units
• D) the flexible-budget and the sales-volume variance are favorable

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Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not affect future business decisions.

Alternatives

Different options or strategies available for achieving a goal or solving a problem, often considered during decision-making processes.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or business activity.

Monthly Rent

A regular payment made for the use of property or land on a monthly basis.