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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!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)
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