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The next year\'s budget for Trend, Inc., a multi-product company, is given below

ID: 2530707 • Letter: T

Question

The next year's budget for Trend, Inc., a multi-product company, is given below:

Product A Product B

Sales $ 1,890,000 $ 1,377,000

Variable costs 926,100 596,700

Fixed costs 500,000 500,000

Net income 463,900 280,300 Units 252,000 108,000

At the end of the year, the total fixed costs and the variable costs per unit were exactly as budgeted, but the following units per product line were sold. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company.

Product Lines Units Sales

A 253,230 $ 1,848,579

B 113,770 $ 1,479,010

What is the total sales price variance?

Explanation / Answer

Note :

1) Budgeted Sales Price per unit = Budgeted Sales / Budgeted units

2 ) Actual Sales Price per unit = Actual Sales / Budgeted units

Answer

Sales Price Variance =( Actual Sales Price per unit - Budgeted Sales Price per unit ) * Actual units sold

Products Actual Sales Price per unit ($) - Budgeted Sales Price per unit ($) * Actual units sold Sales Price Variance Favorable / Unfavorable A 7.30 - 7.50 * 253,230 units $50,646 Unfavorable B 13 - 12.75 * 113,770 units $28,442.50 Favorable Total sales price variance $22,203.50 Unfavorable
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