Secor Educational Services had budgeted its training service charge at $120 per hour. The company planned to provide 30,000 hours of training services during 2019. By lowering the service charge to $114 per hour, the company was able to increase the actual number of hours to 31,500.

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. $180,000 Favorable

b. $189,000 Unfavorable

c. Lowering the training facility price didn't raise sales.

Explanation:

a. Sales Volume Variance = (Actual hours - Budgeted hours) × Budgeted Revenue per hour

Sales Volume Variance = (31,500 - 30,000) × $120

= 1,500 × $120

= $180,000 Favorable

b. Flexible Budget Variance = (Actual revenue per hour - Budgeted revenue per hour) × Actual hours of training

= ($114 - $120) × 31,500

= $189,000 Unfavorable

c. Lowering the training service price did not raise sales. Because, according to actual training hours, actual revenue is lower than budget revenue.

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