Question

Capilla Company experienced an unfavorable sales volume variance and an unfavorable sales price flexible budget variance. Which of the following is a logical explanation for these variances?

a. The company was unable to sell its products and was forced to reduce its sales price.
b. The company reduced its sales price and therefore sold more items that it expected to sell.
c. The sales volume and the sales price were higher than expected.
d. None of the answers is correct.

Answer 1

Option b. The company reduced its sales price and therefore sold more items than it expected to sell.

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