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Godgift
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Joined: 15 Oct 2009
Online Status: Offline
Posts: 100

Posted: 25 Jun 2010 at 17:40 \| IP Logged

I have another question that i need help with: why is Building rent not favorable:

Co. uses a static budget. When actual sales are less than budget, Smart would report favorable

variances on which of the following expense categories?

Sales commissions Building rent

a. Yes &nb sp; &nb sp; Yes

b. Yes &nb sp; &nb sp; No

c. No &nbs p; &nbs p; &nbs p; Yes

d. No &nbs p; &nbs p; &nbs p; No

Averalis
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Joined: 07 May 2010
Online Status: Offline
Posts: 93

Posted: 25 Jun 2010 at 17:54 \| IP Logged

Building rent is a fixed cost, so whether sales are under
budget or not, the cost will be the same. Only variable
costs tend to show favorable variances when sales are less
than budget.

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