Question

Exercise 6-2 Concord Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 1,500 kits was prepared for the year. Fixed operating expenses account for 60% of total operating expenses at this level of sales. Sales Cost of goods sold (all variable) Gross margin Operating expenses Operating income $75,000 45,000 30,000 26,250 $ 3,750 Assume that Concord Sports actually sold 1,575 volleyball kits during the year at a price of $36 per kit. Calculate the sales volume variance for sales revenue and cost of goods sold. (If variance is zero, select "Not Applicable" and ente o for the amounts.) Flexible Budget Sales Volume Variance Static Budget Unit Sales Sales revenue $ $ $ Cost of goods sold

Answer 1

Solution:

	Flexible Budget	Sales volume variance	Static budget
Unit sales	1,575	75	F	1,500
Sales revenue	78,750*	3,750	F	75,000
Cost of goods sold	47,250**	2,250	U	45,000

* 78750 = (75000/1500) X 1575

**47250 = (45000/1500) X 1575