Concept explainers
Concept Introduction:
Sales variance is the difference between the budgeted sales and the 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:
Sales Variance= 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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