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What is the high-low method for splitting semi-variable costs? How does the flexible budget separate the volume variance from other variances? How are flexible budgets used for control reporting? What is the flexible budget variance? What is the difference between a static budget variance and a flexible budget variance? What are the limitations of flexible budgeting? How does flexible budgeting interact with absorption vs marginal costing? How can a flexible budget aid decision-making beyond control? How does flexible budgeting handle a budget prepared as a percentage of capacity? How do you separate fixed and variable elements of a mixed overhead for flexing?
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Budgeting & Forecasting › Flexible Budgets

What is the sales-volume variance in the context of flexible budgets?

Intermediate

Answer

The sales-volume variance is the difference between the static (fixed) budget and the flexible budget, arising purely because actual activity differed from planned. It measures the profit effect of selling/producing a different volume, separated from operating efficiency, which the flexible-budget variance captures.
Static budget profit 100k vs flexed 112k = 12k favorable sales-volume variance.
Real-world example Selling more units than planned produces a favorable sales-volume variance in the flexible-budget analysis.

Common follow-ups: What causes the sales-volume variance? | Which variance measures efficiency instead?

Variance Analysis Types of Budgets Flexible Budgets
All 34 Flexible Budgets questions