Question

A fixed budget performance report indicates a sales variance of $20,000 favorable. The reason for the variance:
O cannot be determined from the fixed budget performance report.
O is that there was a combination of more units sold than budgeted and at a higher price than budgeted.
O is that the company sold more units than budgeted.
O is that the company sold the budgeted number of units, but at a higher price per unit than budgeted.

Answer 1

Answer: O Cannot be determined from the fixed budget performance report.

Explanation:

A fixed budget performance report is used in Accounting to analyse budget spending by comparing actual performance numbers during a period with the predicted numbers in the fixed budget.

It is important to note that this tool is for COMPARISON alone and as such does not include the reasons why there may or may not be a variance, just that there is a variance. You will not see reasons such as, " selling more goods than was expected " for the sales variance in this report.