Sales Variances Assume that Casio Computer Company, LTD. sells handheld communic

Question

Sales Variances
Assume that Casio Computer Company, LTD. sells handheld communication devices for $130 during August as a back-to-school special. The normal selling price is $190. The standard variable cost for each device is $80. Sales for August had been budgeted for 400,000 units nationwide; however, due to the slowdown in the economy, sales were only 350,000.

Compute the revenue, sales price, sales volume, and net sales volume variances.

Revenue variance $Answer AnswerFU Sales price variance $Answer AnswerFU Sales volume variance $Answer AnswerFU Net sales volume variance $Answer AnswerFU

Explanation / Answer

1.Revenue Variance = Actual Sales - Budgeted Sales

350,000*130 - 400,000 *190 = ($30,500,000) - Unfavourable

2.Sales Price Variance = (Actual Sale Price - Budgeted Sale Price) * Actual Quantity
($130 - $190) 350,000 = ($21,000,000) - Unfavourable.

3.Sales Volume Variance = (Actual Unit Sold - Budgeted Unit Sales) * Standard Profit Per Unit

($350,000 - $400,000)*$110 = ($55,00,000) Unfavourable.

Standard Sale Price Per Unit - Standard Cost Per Unit = Standard Profit Per Unit

=$190 - $80 = $110

4.Net Sales Volume Variance = (Actual Unit Sold - Budgeted Unit Sales) * Standard Profit Per Unit

($350,000 - $400,000)*$110 = ($55,00,000)-Unfavourable.

Same as Sales Volume Variance

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