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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Variances – fixed budget profit
Good evening 🙂
Can you please help me with this question?a brief explanation will do. i want to do it on my own but in kaplan textbook am having confusion..the questions are different ! 🙁 Please
Here goes :
A company has recorded the following variances for a period :
Sales variance volume $10,000 adverse
Sales price variance $5,000 favourable
Total cost variance $12,000 adverse
Standard profit on actual sales for the period was $120,000.
What was the fixed budget profit for the period?
>$110,000
>$130,000
>$103,000
>$137,000
correct answer is : $130,000
Thanks
The question asks for the budget profit. Given that the difference between the standard profit on actual sales and the budget profit is the sales volume variance, the budget profit must be 120,000 + 10,000 = 130,000