Final answer:
A favorable flexible budget variance in sales revenue indicates an increase in the volume of sales. This type of variance points to a higher demand for the company's products or services, leading to more units sold or services rendered. Option B is correct.
Step-by-step explanation:
A favorable flexible budget variance in sales revenue suggests an increase in volume. When assessing the performance of a business relative to a budget, the variance can be caused due to different factors. One such positive variance — favorable to the company's financial performance — would be an increase in the number of units sold or services provided, which means there is a higher demand for the company's offerings.
In accounting and budgeting, a variance is the difference between a budgeted, planned or standard amount and the actual amount incurred/sold.
A favorable variance indicates that profits are higher than expected, which is typically due to higher sales volume, increased prices, or lower costs. However, this question specifically pertains to a favorable flexible budget variance in sales revenue, which would generally arise from an increase in the amount of goods or services sold, as variable and fixed costs are not directly implied in this context.