Day: July 24, 2023

The following information about the sale of a product is given:

• Budget sales volume in units – 1,000
• Budget sales revenue – £10,000
• Actual sales volume in units – 900
• Actual sales revenue – £9,900

Which of the following is true?

Select ONE answer:

1. Sales price variance – £100 ADV & Sales volume variance – £NIL
2. Sales price variance – £NIL & Sales volume variance – £100 ADV
3. Sales price variance – £900 FAV & Sales volume variance – £1,000 ADV
4. Sales price variance – £1,000 ADV & Sales volume variance – £900 FAV

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 – Sales Price Variance=(AP − SP)× Units Sold where AP=Actual selling price & SP=Standard price AND Sales volume variance = (Actual units sold – Budgeted units sold) x Budgeted price per unit. Therefore SPV = £11 – £10 * 1,000 == > £900 FAV AND SVV = 9000 – 1,000 * £10 == > £1,000 ADV
4. Not correct

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