Sales variance is the difference between budgeted sales and actual sales. Sales variance can be because of two reasons Actual selling price of the product varies from the budgeted selling price and/or Actual quantity of sales varies from the budgeted quantity. Therefore, sales variance is the sum of (i) Sales Price Variance and (ii) Sales Volume Variance. Sales Price Variance: The difference between the actual selling price and the budgeted selling price is the Sales Price Variance. Sales Volume Variance: The difference between actual quantity of sales and budgeted quantity is the Sales Volume Variance. The following formulas are used to calculate Sales variance: SalesVariance=Sales Price Variance+ Sales Volume Variance Also Sales Variance = Budgeted Sales − Actual Sales Sales Price Variance = Actual Sales - Actual quantity of Sales at budgeted price Sales Volume Variance = Actual quantity at budgeted price -Budgeted quantity at budgeted price Sales variance gives a view of deviations from the set standards which can be wither favorable or unfavorable Sales Price and Volume Variance

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Chapter 23, Problem 20QS

To determine

Concept Introduction:

Sales variance is the difference between budgeted sales and actual sales. Sales variance can be because of two reasons

Actual selling price of the product varies from the budgeted selling price and/or

Actual quantity of sales varies from the budgeted quantity.

Therefore, sales variance is the sum of (i) Sales Price Variance and (ii) Sales Volume Variance.

Sales Price Variance:

The difference between the actual selling price and the budgeted selling price is the Sales Price Variance.

Sales Volume Variance:

The difference between actual quantity of sales and budgeted quantity is the Sales Volume Variance.

The following formulas are used to calculate Sales variance:

SalesVariance=Sales Price Variance+ Sales Volume Variance
Also Sales Variance = Budgeted Sales − Actual Sales
Sales Price Variance = Actual Sales - Actual quantity of Sales at budgeted price

Sales Volume Variance = Actual quantity at budgeted price -Budgeted quantity at budgeted price

Sales variance gives a view of deviations from the set standards which can be wither favorable or unfavorable

Sales Price and Volume Variance

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