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Dear Sir,
I don’t understand how they computed the sales volume variance. Shouldn’t it be budgeted sales minus actual sales in units?
5 The following budgeted data for a particular period was available for a company selling two products:
Sales price Variable cost Sales volume
per unit per unit in units
Product A $20 $8 15,840
Product B $24 $11 10,560
The actual results for the period were as follows:
Sales price Variable cost Sales volume
per unit per unit in units
Product A $22 $8 14,200
Product B $26 $11 12,500
What is the total sales quantity contribution variance for the period?The solution is as follows:
The sales quantity contribution variance is calculated as follows:
Actual sales Standard sales Difference Standard Variance
units in std mix units in std mix in units contribution
Product A 16,020 15,840 180F $12 $2,160F
Product B 10,680 10,560 120F $13 $1,560F ––––––––
Total $3,720FThe question does not ask for the sales volume variance – it asks for the sales quantity variance.
This is the difference between actual total sales at standard mix and budgeted total sales – both costed at standard contribution.
So the answer is correct 🙂
(You can find free lectures working through all of the questions in the June 2015 exam linked from the main F5 page as “Revision Kit Live”)
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