Gibson Educational Services had budgeted its training service charge at $75 per hour. The company planned to provide 38,000 hours of training services during Year 3. By lowering the service charge to $57 per hour, the company was able to increase the actual number of hours to 39,300. Required a. Determine the sales volume variance, and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) b. Determine the flexible budget variance, and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) c. Did lowering the price of training services increase revenue? a. Volume variance b. Flexible budget variance Was the decision profitable? Sales

Cornerstones of Cost Management (Cornerstones Series)
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Chapter18: Pricing And Profitability Analysis
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Gibson Educational Services had budgeted its training service charge at $75 per hour. The company planned to provide 38,000 hours
of training services during Year 3. By lowering the service charge to $57 per hour, the company was able to increase the actual
number of hours to 39,300.
Required
a. Determine the sales volume variance, and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect
(i.e., zero variance).)
b. Determine the flexible budget variance, and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no
effect (i.e., zero variance).)
c. Did lowering the price of training services increase revenue?
a. Volume variance
b. Flexible budget variance
Was the decision profitable?
Sales
Transcribed Image Text:Gibson Educational Services had budgeted its training service charge at $75 per hour. The company planned to provide 38,000 hours of training services during Year 3. By lowering the service charge to $57 per hour, the company was able to increase the actual number of hours to 39,300. Required a. Determine the sales volume variance, and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) b. Determine the flexible budget variance, and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) c. Did lowering the price of training services increase revenue? a. Volume variance b. Flexible budget variance Was the decision profitable? Sales
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