Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › variances
- This topic has 5 replies, 3 voices, and was last updated 6 years ago by John Moffat.
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- July 13, 2017 at 11:31 am #395732
The following data relates to one of a company’s products.
$ per unit $ per unit
Selling price 27.00
Variable costs 12.00
Fixed costs 9.00
21.00
Profit 6.00
Budgeted sales for control period 7 were 2,400 units, but actual sales were 2,550 units. The revenue
earned from these sales was $67,320.
Profit reconciliation statements are drawn up using marginal costing principles. What sales variances
would be included in such a statement for period 7?Mr john, how come answer says 2550 units – 2400 units = 150 units favourable. how come its favourable when budgeted units are more than actual units produced?
July 13, 2017 at 1:58 pm #395763The actual sales were 2,550 and the budget sales were 2,400. Therefore the actual sales were more than the budget sales and therefore the variance is favourable.
(production is nothing to do with sales variances)
September 13, 2017 at 5:01 pm #407529But sir, flexed sales =27*2, 550=68, 850
Actual sales = 67, 320Seems Adverse to me too. How not ?
September 14, 2017 at 7:44 am #407569The original post was asking about the sales volume variance, and that is what I explained.
You are writing the sale price variance, which is adverse, but is not what the original post was asking about.
September 14, 2017 at 8:08 am #407572Ooooh…Thank you.
September 14, 2017 at 12:50 pm #407594You are welcome 🙂
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