Question

Which of the following may cause a favorable sales volume variance of the revenues?

a. actual net income for the subunit is greater than budgeted net income
b. actual sales ($) are greater than the master budget sales ($)
c. the flexible budget sales ($) are greater than the static budget sales ($)
d. actual sales ($) are less than the static budget sales ($)

Answer 1

A favorable sales volume variance in revenues is caused by actual sales being greater than the master budget sales ($), indicating the company sold more than expected.

Step-by-step explanation:

A favorable sales volume variance of the revenues would occur when the number of units sold is higher than anticipated in the budget. Looking at the options provided, the scenario that would lead to a favorable sales volume variance is when the actual sales ($) are greater than the master budget sales ($).

It's important to understand that a favorable variance signifies a better performance than expected. Variance analysis is used in budgeting and financial management to help businesses identify where they are performing differently than their plans.

To clarify, option b (actual sales ($) are greater than the master budget sales ($)) is the correct answer. This is because if the actual sales revenue exceeds what was planned or budgeted, it indicates that the company sold more than expected, which leads to a favorable variance.