AJ Productions has provided the following variance report for the year ended 30 June 2022 Budgeted profit Variance due to change in quantity sold Flexible budget profit (quantity adjusted) Variance due to change in price Variance due to change in variable cost Variance due to change in fixed cost Actual profit $’000 3,000 6,300 Favourable 9,300 2,420 Favourable (3,630) Unfavourable (1,500) Unfavourable 6,590.

a) Assume the change in fixed cost was entirely due to a social media marketing campaign that enabled the company to charge a higher price. Was this marketing campaign justified?

Answer rating: 100% (QA)

Fixed costs sometimes referred to as indirect costs or overhead costs in accounting and economics ar... View the full answer