Answered: Vistula Inc. use a standard costing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Vistula Inc. use a standard costing system for all its products. The bookshelves they produce have a standard variable cost of £25. The standard selling price is £50 and budgeted total sales for April are 750 bookshelves.

The actual selling price was £55, the actual variable costs were £31.50 per bookshelf, and the actual number of bookshelves sold in April was 900.

What is the sales volume variance for April?

-£3,750 favourable

-£3,750 unfavourable

-£2,400 unfavourable

-£2,400 favourable

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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