Lola Inc. produces a product with the following revenue and cost structure: Sell
ID: 2544822 • Letter: L
Question
Lola Inc. produces a product with the following revenue and cost structure:
Selling price
$87.44
Variable cost per unit
43.02
Fixed costs
800,000
Budgeted production and sales for the year ending December 31, 20x9 is 24905 units.
The actual results at the end of the year, December 31, 20x9, are given below:
Actual selling price
$80.74
Variable cost per unit
21.92
Fixed costs
850,000
Actual volume
27060
What is Lola’s sales volume variance for the year 20x9? Note: a negative number represents an unfavourable variance and a positive number represents a favourable variance.
Selling price
$87.44
Variable cost per unit
43.02
Fixed costs
800,000
Explanation / Answer
Sales Voulme variance formula: (Actual units sold - Budgeted units sold)*standard price per unit (27,060 - 24,905)*44.42 95725.1 F where budgeted unit CM Selling price 87.44 less Variable cost per unit 43.02 Standard price per unit 44.42
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