Question

The master budget at Western Company last period called for sales of 225,000 units at $9 each. The costs were estimated to be $3.75 variable per unit and $225,000 fixed. During the period, actual production and actual sales were 230,000 units. The selling price was $9.10 per unit. Variable costs were $4.50 per unit. Actual fixed costs were $225,000. Required: Prepare a sales activity variance analysis

Answer 1

Sales volume variance $26,250 Favorable

Step-by-step explanation:

The sales volume variance is calculated as the difference between the budgeted and the actual sales volume multiplied by he standard contribution per unit

Units

Budgeted sales units 225,000

Actual sales units 230,000

Sales volume 5,000 favorable

Standard contribution(9-3.75) × $5.25

Sales volume variance $ 26,250

Sales volume variance $26,250 Favorable

Note standard contribution = standard selling price - standard variable cost