Question

In analyzing company operations, the controller of the Carson Corporation found a $250,000 favorable flexible budget revenue variance. The variance was calculated by comparing the actual results with the flexible budget. This variance can be wholly explained by: (CMA adapted)

A. the total flexible budget variance.
B. the total static budget variance.
C. changes in unit selling prices.
D. changes in the number of units sold.

Answer 1

The $250,000 favorable flexible budget revenue variance can be wholly explained by changes in the number of units sold (D).

Step-by-step explanation:

The favorable flexible budget revenue variance of $250,000 is a result of the change in the number of units sold (D). This variance is calculated by comparing the actual revenue results with the flexible budget and represents the difference between the actual revenue earned and the revenue that would have been earned if the actual number of units sold had matched the projected number of units sold in the flexible budget. This provides insight into the effectiveness of revenue planning and helps identify areas for improvement in future budgeting.