The sales volume variance is the difference between sales revenue on the static budget and sales revenue on the flexible budget.

Question

Quizplus · Accepted Answer

This statement is correct. The sales volume variance is calculated as the difference between the actual sales revenue realized and the revenue that would have been realized if sales had remained at the same level as the static budget. The flexible budget takes into account changes in the level of activity, such as changes in sales volume, while the static budget is based on a fixed level of activity. Therefore, comparing the sales revenue on the two budgets can help identify the effects of changes in sales volume on the overall revenue.

The Sales Volume Variance Is the Difference Between Sales Revenue