selling price variance
investment variance
profit variance
primary variance
Answer is Right!
Answer is Wrong!
The correct answer is: A. selling price variance
A flexible budget is a budget that is adjusted for changes in the level of activity. The flexible budget variance for revenues is the difference between the actual revenues and the revenues that would have been earned if the actual level of activity had been used in the budget. This variance is classified as a selling price variance because it is caused by a difference between the actual selling price and the budgeted selling price.
The other options are incorrect because:
- Option B, investment variance, is a variance that measures the difference between the actual investment and the budgeted investment.
- Option C, profit variance, is a variance that measures the difference between the actual profit and the budgeted profit.
- Option D, primary variance, is a general term that refers to any variance that is not a secondary variance.