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Sales Price Variance:
Sales price variance is the difference between the budgeted selling price per unit and actual selling price per unit. Since sale price is revenue factor, if the actual selling price is more than the expected selling price, the variance is considered as favorable and if the actual selling price is less than the expected selling price, the variance is considered as unfavorable.
Sales Quantity Variance:
The sales variance which is caused by difference between the standard quantity and actual quantity is called a sales quantity variance. The favorability of sales quantity variance depends on whether the variance is increasing the sales revenue or decreasing it. If the actual quantity is more than the budgeted quantity, the variance is increasing the sales revenue. Thereby the variance is considered as favorable and vice-versa.
To determine:
1. Computation of sales price variance and sales volume variance
2. Interpretation
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Chapter 23 Solutions
Loose Leaf for Fundamental Accounting Principles
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