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.

Question

Business

Mylee Gates

19 January, 15:37

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.

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Gideon · Answer 1

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