At the beginning of its most recent accounting period, Milton Company had planned to clean 400 house roofs at an average price of $360 per roof. By reducing the service charge to $320 per roof, the company was able to increase the actual number of roofs cleaned to 480.
a. Determine the sales volume variance and indicate whether it is favorable (F) or unfavorable (U).
b. Determine the flexible budget variance and indicate whether it is favorable (F) or unfavorable (U).
c. Did reducing the price charged for cleaning roofs increase revenue? Explain.