F5 Jun’08 Q1(b)

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    sarahlim
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    to calculate the the variance of sales price
    we should use the actual sales price – actual sales unit @ standard cost right?
    According to the question the sales price for flexed budget is $2016000
    and the actual sales price is 1800000 so the variance should be 216000(A)
    But the answer is like this: Sales price: (225 – 240)8,000 = 120,000 Adv
    Hmmm….I am really confuse now and need help urgently!


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    pavanpavanmehta
    Participant
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    For calculation of sales price variance you have to calculate for actual production.
    So actual price-standard price(actual production)
    225-240(8000)
    In a flexed budget the figure is 2016000 are for a standard production.
    So you have to calculate for actual production to get sales price variance.


    Avatar of johnmoffat
    John Moffat
    Keymaster
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    For sales price variance you use actual sales units (not production, although in this question the sales = the production).

    Actual sales at actual selling price = 1800000 (from the question)

    Actual sales at standard selling price = 8000 tonnes x $240 (per tonne) = 1920000

    So sales price variance = 1920000 – 1800000 = 120000 (adverse)


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    sarahlim
    Participant
    • Topics: 21
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    Ooo… i thought the actual sales is 8400 tonne
    TQ very much


    Avatar of johnmoffat
    John Moffat
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    You are welcome :-)

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