Syllabus E: Standard costing — ACCA Practice Question 27

How to approach this question

Think about what causes a company to sell FEWER units than budgeted. Competitors, high prices, and lack of stock all reduce sales volume.

Full Answer

An Adverse Sales Volume Variance means the company sold fewer units than budgeted. This can be caused by external factors (new competitors reducing market share), internal strategic decisions (raising prices, which increases price variance but hurts volume), or operational failures (production delays leading to stockouts). A successful marketing campaign would increase sales, leading to a favorable variance.

Common mistakes

Failing to recognize that a deliberate increase in selling price (which is good for price variance) often negatively impacts sales volume.

A luxury electric yacht company experiences an Adverse Sales Volume Variance for the year.

Which of the following could be valid reasons for this adverse variance? (Select all that apply)

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 1

More questions from this exam

A luxury electric yacht company experiences an Adverse Sales Volume Variance for the year. Which of the following could be valid reasons for this adverse variance? (Select all that apply)

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 1

More questions from this exam

A luxury electric yacht company experiences an Adverse Sales Volume Variance for the year.

Which of the following could be valid reasons for this adverse variance? (Select all that apply)