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Hi John,
Wanted to see your guidance to getting answer for below question –
ABC sells product X & Y. The standard contribution is $4 and $5 respectively. Standard profit is $1.5 and $2.40 respectively. The budget was to sell 5 Xs and 3 Ys.
Actual sales were up 20,000 and 240,000 units with X type products being 200,000 of that total.
What is the value of the favorable sales quantity variance?
The actual total sales are 240,000 and the budget total sales were 220,000.
For the quantity variance we compare the actual total sales at standard mix (X: 5/8 and Y:3/8), with the budget sales.
The question makes it clear that they are using marginal costing (even though you have not typed this bit) and so in both cases we cost out at the standard contribution per unit.
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