The total traceable costs of the account billing activity centre is $245,000. Cost behaviour analysis indicates that fixed costs are $75,000. Activity analysis indicates that the cost driver for account billing activity is the number of lines printed, and the total lines printed is 2,500,000.
-A favourable sales-activity variance means that
A) managers have been efficient in the implementation of a sales budget.
B) managers have been effective in accomplishing a planned sales level.
C) demand for the company product is strong.
D) the sales force has done an excellent job.

Question

Quizplus · Accepted Answer

A favourable sales-activity variance means that the actual sales level achieved is higher than the planned sales level. This indicates that managers have been effective in accomplishing the planned sales level, which is a positive outcome. It does not necessarily mean that managers have been efficient in the implementation of a sales budget, that demand for the company product is strong, or that the sales force has done an excellent job.

The Total Traceable Costs of the Account Billing Activity Centre