Question

Milltown Company specializes in selling used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales price variance for the month.

Answer 1

Answer:

$-22,000

Explanation:

The sales price variance is a measure of the difference between what a firm expected to make in sales revenue, and what it actually made.

The formula is:

(Actual Selling Price - Expected Price) x Units Sold

Plugging the amounts into the formula we obtain:

= (15,000 - 16,000) x 22

= -1,000 x 22

= -22,000

Thus, the price variance is -22,000