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SALE VARIANCES

GGabbi11y ago
Dear Mr Moffat Could you please confirm if the logic that I have used to answer below question is correct and if not explain to me why? A company uses standard marginal costing. Last month the standard contribution on actual sales was $10,000 and the following variances arise: Total variable costs variances $ 2,000 adverse Sale Price variance $ 500 Favourable Sale volume contribution variance $ 1,000 advence What was the actual contribution for last month? My working From standard contribution to actual contribution we need to add and subtract the variances, then $10,000-$2,000+$500 =$8,500. The sale volume contribution should not be included because the calculation is based on the actual sale and qty does not change, whereas the sale volume contribution variance shown the contribution between the actual sale and the budgeted sale. Thanks a lot Gabbi
John MoffatJohn MoffatTutor11y ago#1
What you have done is correct :-)
GGabbi11y ago#2
Thanks a lot Gabbi
John MoffatJohn MoffatTutor11y ago#3
You are welcome :-)
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