5. (TCO 8) Western Company’s budgeted and actual sales for 2009 were as follows.
ID: 2415539 • Letter: 5
Question
5. (TCO 8) Western Company’s budgeted and actual sales for 2009 were as follows.
Product
Budgeted Sales
Actual Sales
A
10,250 units at $16.00 per unit
12,130 units at $15.60 per unit
B
15,560 units at $12.00 per unit
12,940 units at $12.40 per unit
Part (a): Calculate the sales volume variance.
Part (b): Calculate the sales price variance.
Part (c): Calculate the total sales variance. (Points : 30)
Product
Budgeted Sales
Actual Sales
A
10,250 units at $16.00 per unit
12,130 units at $15.60 per unit
B
15,560 units at $12.00 per unit
12,940 units at $12.40 per unit
Explanation / Answer
a: Sales Volume Variance = (Budgeted Quantity - Actual Quantity) X Budgeted Selling Price
A = (10250 - 12130) x 16 = $30080 F
B = (15560 - 12940) x 12 = $31440 U
Total Sales VolumeVariance = $1360 U
b: Sales Price variance = (Budgeted selling price - Actual selling price) x Actual quantity
A = (16 - 15.60) x 12130 = $4852 U
B = (12 - 12.40) x 12940 = $5176 F
Total Sales Price Variance = $324 F
c: Total sales variance = Sales Volume Variance + Sales Price Variance
= 1360 U + 324 F
= $1036 U
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