Help2 — OpenTuition Forums

Jjoseph8915y ago

A company has recorded the following variances for a period:
sales volume variance 10 000$ adverse
sales price variance 5000$ favourable
Total cost variance 12 000$ adverse

standard profit on actual sales for the period was $120 000
what was the fixed budget profit for the period?
the answer is 130 000$. can anyone explain in details why...?

Vipin14y ago#1

standard profit * actual sales=120,000
standard profit*(budget sales -actual sales)=10,000(when adverse budget sales volume is higher)
standard profit*budget sales-std profit*actual sales=10,000
std profit*budget sales-120,000=10,000
std profit*budget sales=130,000
fixed budget profit is sames as std profit*budget sales volume.