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Sales Quantity Variance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Sales Quantity Variance

  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by AvatarJohn Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • May 9, 2019 at 4:28 pm #515435
    AvatarAvoaja
    Member
    • Topics: 2
    • Replies: 2
    • ☆

    Question
    A company makes and sells three products. Budgeted and actual results for the period just ended were as follows.
    Product Budgeted sales Budgeted profit per unit Actual sales Actual profit per unit
    Units $ Units $
    X 800 10 700 8
    Y 1,000 6 1,200 6
    Z 600 12 350 16
    —— ——–
    2,400 2,250
    What was the sales quantity variance?

    Answer
    The correct answer is: $1,325 (A)
    Budgeted sales Std profit Budgeted profit
    Units $ per unit $
    X 800 10 8,000
    Y 1,000 6 6,000
    Z 600 12 7,200
    ———- ———-
    2,400 21,200

    Weighted average standard profit per unit = $21,200/2,400 = $8.8333
    Quantity variance in units = 2,400 – 2,250 = 150 units (A)
    Quantity variance in $ (standard profit) = 150 (A) × $8.8333 = $1,325 (A)

    My question, why are they using weighted average?

    Thank you

    May 10, 2019 at 7:20 am #515467
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    Because for the quantity variance we are ignoring the change in the mix. If the mix stays the same, then the average profit per unit stays the same as well.

    I always think it is more obvious doing it the way I do in my free lectures, which of course gives exactly the same answer 🙂

    May 11, 2019 at 10:04 am #515592
    AvatarAvoaja
    Member
    • Topics: 2
    • Replies: 2
    • ☆

    Thank you sir.

    May 11, 2019 at 1:31 pm #515610
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Sales Quantity Variance’ is closed to new replies.

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