Sales volume Sales price Unit VC Input price for DL Input quantity per unit for DL Budgeted 110 units O $200 favorable $50 per unit $30 per unit $10 per hour 1.5 hours per unit Compute sales volume variance Actual 100 units $55 per unit $33 per unit $12 per hour 2 hours per unit
Sales volume Sales price Unit VC Input price for DL Input quantity per unit for DL Budgeted 110 units O $200 favorable $50 per unit $30 per unit $10 per hour 1.5 hours per unit Compute sales volume variance Actual 100 units $55 per unit $33 per unit $12 per hour 2 hours per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![**Sales Variance Analysis**
The table below compares budgeted figures against actual figures for a particular product. The aim is to compute the sales volume variance.
| Category | Budgeted | Actual |
|-------------------------------|-----------------|----------------|
| **Sales Volume** | 110 units | 100 units |
| **Sales Price** | $50 per unit | $55 per unit |
| **Unit Variable Cost (VC)** | $30 per unit | $33 per unit |
| **Input Price for Direct Labor (DL)** | $10 per hour | $12 per hour |
| **Input Quantity per Unit for DL** | 1.5 hours | 2 hours |
**Compute Sales Volume Variance**
Sales volume variance measures the effect on operating income arising from the difference between the actual and budgeted sales volume. It can be calculated using the formula:
\[ \text{Sales Volume Variance} = (\text{Actual Sales Volume} - \text{Budgeted Sales Volume}) \times \text{Budgeted Contribution Margin per Unit} \]
**Contribution Margin per Unit (Budgeted):**
\[ \text{Budgeted Sales Price} - \text{Budgeted Unit VC} = \$50 - \$30 = \$20 \]
**Sales Volume Variance:**
\[ (100 - 110) \times \$20 = -10 \times \$20 = -\$200 \]
This results in a **$200 unfavorable** variance.
> _Options for Answer:_
> - $200 favorable
> - [Unfavorable variance calculated above]
This analysis helps businesses understand the impact of sales volume deviations and adjust their strategies accordingly.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff70ac400-ca2b-42e3-9688-f7f5894bc9ea%2F86da6eb4-5c27-40a3-bb7f-20e7a5b36c11%2F534yo5q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Sales Variance Analysis**
The table below compares budgeted figures against actual figures for a particular product. The aim is to compute the sales volume variance.
| Category | Budgeted | Actual |
|-------------------------------|-----------------|----------------|
| **Sales Volume** | 110 units | 100 units |
| **Sales Price** | $50 per unit | $55 per unit |
| **Unit Variable Cost (VC)** | $30 per unit | $33 per unit |
| **Input Price for Direct Labor (DL)** | $10 per hour | $12 per hour |
| **Input Quantity per Unit for DL** | 1.5 hours | 2 hours |
**Compute Sales Volume Variance**
Sales volume variance measures the effect on operating income arising from the difference between the actual and budgeted sales volume. It can be calculated using the formula:
\[ \text{Sales Volume Variance} = (\text{Actual Sales Volume} - \text{Budgeted Sales Volume}) \times \text{Budgeted Contribution Margin per Unit} \]
**Contribution Margin per Unit (Budgeted):**
\[ \text{Budgeted Sales Price} - \text{Budgeted Unit VC} = \$50 - \$30 = \$20 \]
**Sales Volume Variance:**
\[ (100 - 110) \times \$20 = -10 \times \$20 = -\$200 \]
This results in a **$200 unfavorable** variance.
> _Options for Answer:_
> - $200 favorable
> - [Unfavorable variance calculated above]
This analysis helps businesses understand the impact of sales volume deviations and adjust their strategies accordingly.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education