Business Studies Multiple Choice Question – 7 July 2021

The Arcade coffee bar in Stone in the centre of this town.  Its budgeted sales for June were 1,500 coffees sold at a price of £1.40 each.  Actual sales in June were 1,350 units at £1.50 each.

The manager calculated the sales variance to be?

Select ONE answer:

1. £2,100 adverse
2. £2,100 favourable
3. £75 adverse
4. £75 favourable

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Definition of sales variance e.g. the difference between a budgeted figure and the actual figure.  Actual sales: 1350 x £1.5 = £2,025.  Budgeted sales: 1500 x £14 = £2,100.  £2,025 – 2,100 (1) = £75 adverse 
4. Not correct

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