ExpertMedium2 marksMultiple Choice
ACCA · Question 27 · Syllabus E: Standard costing
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)
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)
Answer options:
A.
A new competitor entered the market, reducing the company's market share.
B.
The company increased its selling price above the standard price.
C.
Production delays caused stockouts, preventing the company from fulfilling orders.
D.
The marketing department ran a highly successful promotional campaign.
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.
Practice the full ACCA MA — Management Accounting Practice Exam 1
38 questions · hints · full answers · grading
More questions from this exam
Q01BioGenix Therapeutics is deciding whether to acquire a smaller biotech startup to expand its gene...EasyQ02AeroSpace Imaging Inc. processes terabytes of satellite imagery daily to provide real-time agricu...MediumQ03A non-governmental organization (NGO) providing clean water solutions incurs the following costs ...EasyQ04The IT support department of a global fintech company provides internal services to other departm...EasyQ05Which of the following is NOT a characteristic of good management information, according to the A...Easy