Question

Kahn Company's static budget was based on sales volume of 12,000 units. Its flexible budget was based on sales volume of 14,000 units. Based on this information Multiple Choice the sales volume variance is expected to be unfavorable. the materials cost volume variance is expected to be favorable. the labor cost volume variance is expected to be unfavorable. None of the answers is correct.

Answer 1

the labor cost volume variance is expected to be unfavorable.

Step-by-step explanation:

Data provided in the question

Static budget based on sales volume = 12,000 units

Flexible budget based on sales volume = 14,000 units

Since as we can see that

The sales volume is increased by $2,000 by taking the difference between the 12,000 units and 14,000 units due to which the labor cost is also increased which results into unfavorable of labor cost volume variance