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Actual profit 25000
budgeted profit 30000
Standard profit from actual sales 15000
Calculate sales volume profit variance
Sales price variance
Direct material price varianceAns- sales volume profit variance 15,000 adverse
Sales price variances 2000 favourable
Direct material price variance 8,000 favourable
I don’t know how they have calculated.
Thank you sirThe difference between the standard profit from actual sales and the budgeted profit is 15,000 adverse and this is the sales volume variance.
The difference between the actual profit and the budget profit is 5,000 adverse and so this is the total of the sales price and the material variances.
Therefore the total of the sales price and the material variances must be 10,000 favourable.
There is not enough information to be able to calculate the sales price and material variances separately, but if you look at the question I think you will find that there are several choices and only one of them has a sales volume of 15,000 adverse, and sales price and materials variances that add up to 10,000 favourable.
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