Question

Assume that Casio Computer Company, LTD. sells handheld communication devices for $120 during August as a back-to-school special. The normal selling price is $180. The standard variable cost for each device is $60. Sales for August had been budgeted for 500,000 units nationwide; however, due to the slowdown in the economy, sales were only 450,000. Compute the revenue, sales price, sales volume, and net sales volume variances.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Casio Computer Company, LTD. sells handheld communication devices for $120 during August as a back-to-school special. The normal selling price is $180. The standard variable cost for each device is $60. Sales for August had been budgeted for 500,000 units nationwide; however, due to the slowdown in the economy, sales were only 450,000.

Sales price variance= (standard price - actual price)*actual quantity

Sales price variance= (180 - 120)*450,000= 27,000,000 unfavorable

Sales quantity variance= (standard quantity - actual quantity)*standard price

Sales quantity variance= (500,000 - 450,000)*180= 9,000,000 unfavorable

Total variance= 36,000,000 unfavorable