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John Moffat.
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- November 24, 2018 at 6:36 am #485746
W Ltd uses a standard marginal costing system. The following data relates to one of its products.
selling price: $ 27/unit
variable cost:$12/unit
fixed cost :$9/unit
profit :$6/unitBudgeted sales for control period 7 were 2400 units, but actual sales were 2550 units.The revenue earned from these sales were $67320.
Profit reconciliation statements are drawn up using marginal costing system. Whar sales variance would be included in such a statement for period 7?
A. price variance: $1530(A) volume variance: $900(F)
B. price variance: $1530(A) volume variance:$2250(F)
C. price variance: $1530(A) volume variance: $2250(A)
D. price variance: $1530(F) volume variance : $2250(F)The correct answer is B
I have been able to calculate volume variance by (2550-2400) x (27-12)= $2250(F)
however I did not been able to calculate price variance
I would be grateful if you can help me sir.
November 24, 2018 at 9:33 am #485771The actual sales at standard selling price = 2,550 x $27 = 68,850.
The actual sales at actual selling price = $67,320Therefore the sales price variance is 68850 – 67320 = $1,530 adverse
I do suggest that you watch my free lectures on this. The lectures are a complete free course and cover everything needed to be able to pass the exam well.
November 24, 2018 at 4:55 pm #485829Thank you, sIr for your precious explanation.
November 25, 2018 at 9:54 am #485901You are welcome 🙂
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