F5 Jun'08 Q1(b)

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.

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)

Ooo... i thought the actual sales is 8400 tonne
TQ very much

You are welcome :)