Ask Question
1 August, 08:06

Assume that actual sales results exceed the planned results for the second quarter. This favorable difference is greater than the unfavorable difference reported for the first quarter sales. Which of the following statements about the sales budget report on June 30 is true?

a. The year-to-date results will show a favorable difference.

b. The year-to-date results will show an unfavorable difference

c. The difference between the first quarter can be ignored.

d. The sales report is not useful if it shows a favorable and unfavorable difference for the two quarters

+5
Answers (1)
  1. 1 August, 08:26
    0
    (A) The year-to-date results will show a favorable difference

    Explanation:

    Actual sales result in the second quarter (Q2) exceeding the budgeted result can be expresses as follows:

    (Q2 actual) - (Q2 budget) = positive

    The unfavourable difference in the first quarter can be expressed as follows:

    (Q1 actual) - (Q1 budget) = negative

    Since the favourable difference in Q2 is greater than the unfavourable difference in Q1, we can say Q1 had a lower negative, while Q2 had a higher positive. The net result in the first half of the year (Q1 and Q2) will be as follows:

    first half result = Q1 result + Q2 result

    = lower negative + higher positive = positive.

    Accordingly, the first half result (year to date) will show a favourable difference.

    Option (B) is wrong as we just showed that the year to date result will be favourable. Option (C) is wrong because the first quarter result is a component of the year to date result and cannot be ignored. Option (D) is wrong because the sales report is useful irrespective of the sequence of the quarterly results.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Assume that actual sales results exceed the planned results for the second quarter. This favorable difference is greater than the ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers