Capilla Company experienced a favourable sales volume variance and an unfavourable sales price flexible budget variance. Which of the following is a logical explanation for these variances?
a. The company increased its sales price and therefore sold fewer than it expected to sell.
b. The company reduced its sales price and therefore sold more items than it expected to sell.
c.The standard sales price per unit was lower than the actual price per unit while volume did not change
d. none of the answers is correct

Question

09-12-2022
Business

Answered

Capilla Company experienced a favourable sales volume variance and an unfavourable sales price flexible budget variance. Which of the following is a logical explanation for these variances?
a. The company increased its sales price and therefore sold fewer than it expected to sell.
b. The company reduced its sales price and therefore sold more items than it expected to sell.
c.The standard sales price per unit was lower than the actual price per unit while volume did not change
d. none of the answers is correct

Answer :

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smecloudbird17 smecloudbird17 · Answer 1 · 2022-12-16T02:35:44-05:00

The company reduced its sales price and therefore sold more items than it expected to sell is a logical explanation for these variances.

The company sales variance is the difference between the company's actual sales and its budgeted or expected sales. The variance can be either positive or negative, and it is typically expressed as a percentage.

A positive sales variance indicates that the company has exceeded its sales goals, while a negative sales variance indicates that the company has fallen short of its sales goals. The sales variance is a key metric that helps businesses to assess their sales performance.

Hence, the correct option is "B".

To know more about variances, click here.

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