The Kentucky Foam Products Company completed the flexible budget analysis for the second quarter, which is given below

Question

Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget
Units 12,820 0 12,820 920 F 11,900
Sales Revenue $62,730 $1,270 U $64,000 $4,000 F $60,000
Variable Costs 27,600 700 U 26,900 $1,680 U 25,220
Contribution Margin $35,130 $1,970 U $37,100 $2,320 F $34,780
Fixed Costs 34,250 170 U 34,080 $0 34,080
Operating Income/(Loss) $880 $2,140 U $3,020 $2,320 F $700

Which of the following would be a correct analysis of the sales volume variance for variable costs?
A) decrease in sales price per unit
B) increase in variable cost per unit
C) increase in sales volume
D) increase in fixed costs

Answer 1

C