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Dear Sir,
Can you please help me with the following question?
A firm uses standard marginal costing. Last period the following results were recorded:
Actual sales units : 5000
Std Cont per unit: $60Sales price variance $5000 Adverse
Sales volume contribution variance $ 8000 FAV
No other variances arose last periodWhat was the actual contribution for the period?
A 295,000
B 305,000
C 297,000
D 303,000I did it as 5000 x 60 = 300,000 Less sales price variance 5000 and add sales vol cont variance 8,000 = 303,000
but the answer is 295,000
Why is the sales volume contribution variance ignored then?
Thanks in advance
You must in future ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
$300,000 is not the original budget contribution. It is the standard contribution on the actual sales.
(The volume variance explains the difference between the standard contribution on the actual sales and the original budget contribution, but that is not relevant here).
Sorry for posting in the wrong forum. I pressed on Ask the tutor then I dont know what I did.
But thanks so much for answering, this was bugging me.
You do a great job Sir, it is amazing for us students.
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