*Exercise 6-3 Vaughn Sports sells volleyball kits that it purchases from a sport

Question

*Exercise 6-3 Vaughn Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 200 kits was prepared for the year. Fixed operating expenses account for 8% of total operating expenses at this level of sales. $10,000 6,000 4,000 3,500 $ 500 Sales Cost of goods sold (all variable) Gross margin Operating expenses Operating income Assume that during the year Vaughn Sports actually sold 210 volleyball kits during the year at a price of $5 per kit. Calculate the sales price variance. (If variance is zero, select "Not Applicable" and enter O for the amounts.) Sales price variance $ Question Attempts: 0 of 3 used

Explanation / Answer

Sales Price Variance = (Actual Sales Price - Budgeted Sales Price)*Actual Sales Quantity) = (5-50)*210 = $ 9,450 Unfavorable Working: Budgeted Sales Price = Budgeted Sales / Budgeted Sales Quantity = $       10,000 / 200 = $ 50

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