Saginaw Company is a garden products wholesale firm. In December, Saginaw Compan
ID: 3141239 • Letter: S
Question
Saginaw Company is a garden products wholesale firm. In December, Saginaw Company expects to sell 23,000 bags of vegetable fertilizer at an average price of $5.2 per bag. Actual results are 23,650 bags sold at an average price of $5.1 per bag.
Required:
1. Calculate the sales price variance for December.
$ _________unfavorable
2. Calculate the sales volume variance for December.
$ _________Favorable
3. Calculate the overall sales variance for December.
$__________Favorable
4. What if December sales were actually 22,800 bags calculate the new sales price variance?
$________ Unfavorable
The sales volume variance?
$________ Unfavorable
The overall sales variance?
$ __________ UnfavorableIe
Explanation / Answer
Solution:
1. the sales price variance for December
= Actual Sales Units × Actual Price – Actual Sales Units × Budgeted Price
= $ 23650 x 5.1 - 23,000 x 5.2
= $ 1015
(2)
Sales volume variance = (Actual units sold - Budgeted units sold) x Budgeted price per unit
= (23650 - 23000 ) x 5.2
= 3380
(3)
the overall sales variance for December.
(total revenue / actual unit - Budgeted price ) x actual unit sold
= (5.1 - 5.2 ) x 23650
= -0.1 x23650
= - $ 2365
4.
December sales were actually 22,800 bags calculate the new sales price variance
= Actual Sales Units × Actual Price – Actual Sales Units × Budgeted Price
= $ 22800 x 5.1 - 23,000 x 5.2
= - 3320
The sales volume variance
= (22800 - 23000) x 5.2
= -1040
The overall sales variance
(5.1- 5.2) x 22800
= -2280
= -$ 2280
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