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A company uses a standard costing system. the following figures are available for the last accounting period in which the profit has $124,000.
sales volume contribution variance $9,000 favourable
sales price variance $8,000 adverse
Total variable cost variance $13,000 favourable
Fixed cost expenditure variance $4,000 adversewhat has the standard profit for the actual sales in the last accounting period?
a) $125,000
b) $123,000
c) $134,000Because they ask for the standard profit for the actual sales (not for the budgeted profit) the sales volume variance is not relevant. It is only the other 3 that are relevant.
So if the standard profit for actual sales is X, then the actual profit will be X – 8,000 + 13,000 – 4,000 = 124,000
So X +1,000 = 124,000
So X = 123,000
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