Question

ht 1 Assignment Exercise 21-23 Computing and interpreting sales variances LO A1 Comp Wiz sells computers. During May 2017, it sold 700 computers at a $1,100 average price each. The May 2017 fored budget included sales of 750 computers at an average price of $1,070 each. AQ = Actual Quantity SQ = Standard Quantity AP - Actual Price SP = Standard Price (1) Compute the sales price variance and the sales volume variance for May 2017 Actual Sales Flexible Budget Budgeted Sales

Answer 1

Sales volume variance = (Actual units sold - Budgeted units sold) * Budgeted price per unit

Given: Actual units sold = 700, Budgeted units sold = 750, Budgeted price per unit = $1070

Putting these values in the above formula, we get,

Sales volume variance = (700 - 750) * $1070

Sales volume variance = -50 * $1070 = - $53500

Since the variance is negative, so it is an unfavorable variance.

Sales price variance = (Budgeted price - Actual price) * Actual units sold

Given: Actual price = $1100, Budgeted price = $1070, Actual units sold = 700

Putting these values in the above formula, we get,

Sales price variance = ($1070 - $1100) * 700

Sales price variance = -30 * $700 = -$2100

Since the variance is negative, so it is an unfavorable variance.