The following data relates to one of a company’s products.
$ per unit $ per unit
Selling price 27.00
Variable costs 12.00
Fixed costs 9.00
Budgeted sales for control period 7 were 2,400 units, but actual sales were 2,550 units. The revenue
earned from these sales was $67,320.
Profit reconciliation statements are drawn up using marginal costing principles. What sales variances
would be included in such a statement for period 7?
Mr john, how come answer says 2550 units – 2400 units = 150 units favourable. how come its favourable when budgeted units are more than actual units produced?
The actual sales were 2,550 and the budget sales were 2,400. Therefore the actual sales were more than the budget sales and therefore the variance is favourable.
(production is nothing to do with sales variances)
But sir, flexed sales =27*2, 550=68, 850
Actual sales = 67, 320
Seems Adverse to me too. How not ?
The original post was asking about the sales volume variance, and that is what I explained.
You are writing the sale price variance, which is adverse, but is not what the original post was asking about.
You are welcome 🙂
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