Define sales volume variance.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Define sales volume variance.
Sales volume variance (also known as sales quantity variance) occurs when the actual quantity of units sold deviates from the standard or budgeted quantity of units sold during a specific period of time. In simple terms, sales volume variance is the difference between the actual units sold at the standard price and standard units sold at the standard price.
The sales volume variance is said to favorable when the actual quantity of units sold is more than the budgeted quantity of units sold. The sales volume variance is said to unfavorable when the actual quantity of units sold is less than the budgeted quantity of units sold.
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