The following data pertain to Aurora Electronics for the month of February.
| Static Budget | Actual | |||||||
| Units sold | 14,000 | 11,000 | ||||||
| Sales revenue | $ | 196,000 | $ | 137,500 | ||||
| Variable manufacturing cost | 5,000 | 42,000 | ||||||
| Fixed manufacturing cost | 25,000 | 25,000 | ||||||
| Variable selling and administrative cost | 15,000 | 9,000 | ||||||
| Fixed selling and administrative cost | 15,000 | 15,000 | ||||||
Required:
Compute the sales-price and sales-volume variances for February. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)
Homework Answers
|
Sales price Variance = AS-(SP*AQ) = 137,500 - (11,000*(196,000/14,000)) = 16,500 Unfavorable |
|
Sales volume variance = (SQ-AQ) *SP = (14,000 - 11,000) * (196,000/14,000) = 42,000 Unfavorable |
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