Question

The following data pertain to Aurora Electronics for the month of February. Static Budget Actual Units sold 10,000 9,000 Sales revenue $ 120,000 $ 103,500 Variable manufacturing cost 40,000 36,000 Fixed manufacturing cost 20,000 20,000 Variable selling and administrative cost 10,000 9,000 Fixed selling and administrative cost 10,000 10,000 Required: Compute the sales-price and sales-volume variances for February.

Answer 1

Answer:

The sales-price variance is $4,500 adverse and sales-volume variance is $12,000 unfavorable

Explanation:

In order to calculate the sales-price and sales-volume variances we would have to use the following formula:

sales-price variance=(standard price- actual price)× Actual Sales

standard price=bugdet sales revenue/units sold=$ 120,000/10,000=$12

actual price=actual sales revenue/units sold=$103,500/9,000=$11.50

Therefore, sales-price variance=($12-$11.50)×9,000

sales-price variance=$4,500 adverse

sales-volume variance=(standard units-actual units)×standard price

sales-volume variance=(10,000-9,000)×$12

sales-volume variance=$12,000 unfavorable

The sales-price variance is $4,500 adverse and sales-volume variance is $12,000 unfavorable