Which variance reveals whether additional sales revenue can offset an increase in costs in the flexible budget performance report?

The sales volume variance is significant because it measures the impact of the difference between the actual sales volume and the budgeted sales volume on the overall performance of the company. This variance highlights how changes in the number of units sold can influence total revenues. If the sales volume increases, it may provide additional revenue that can help cover any increases in costs, thereby aiding in overall profitability.

By analyzing the sales volume variance, management can assess whether the additional revenue generated from more units sold is sufficient to offset the higher costs. This is crucial for decision-making, as it provides insight into whether the company's pricing and sales strategies are effective in a given period. Understanding this variance can aid in evaluating the effectiveness of operations and strategies used to manage costs relative to changes in sales volume.

Other types of variances, such as cost variance and flexible variance, focus on different aspects of performance. The cost variance looks at discrepancies between actual and expected spending, while the flexible variance analyzes the difference between actual results and adjusted budget based on actual volume. However, neither specifically indicates how changes in sales volume can affect revenue's ability to absorb cost increases.