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If 2,100 units were sold, what is the sales price variance?

Accounting

ScanSolve AI Answer

Answer

\text{C } \420 \text{ adverse}$

Step-by-step solution

3 steps

To calculate the sales price variance, we need to compare the actual selling price per unit with the budgeted selling price per unit, multiplied by the actual quantity sold.

  1. Determine the actual selling price per unit.

    The actual sales revenue was \10,080$ for 2,100 units sold.

    Actual Selling Price per Unit=Actual Sales RevenueActual Units Sold\text{Actual Selling Price per Unit} = \frac{\text{Actual Sales Revenue}}{\text{Actual Units Sold}}

    Actual Selling Price per Unit=$10,0802,100 units\text{Actual Selling Price per Unit} = \frac{\$10,080}{2,100 \text{ units}} Actual Selling Price per Unit=$4.80 per unit\text{Actual Selling Price per Unit} = \$4.80 \text{ per unit}

  2. Calculate the sales price variance.

    The budgeted selling price per unit was \5$.

    Sales Price Variance=(Actual Selling Price per Unit−Budgeted Selling Price per Unit)×Actual Units Sold\text{Sales Price Variance} = (\text{Actual Selling Price per Unit} - \text{Budgeted Selling Price per Unit}) \times \text{Actual Units Sold}

    Sales Price Variance=($4.80−$5.00)×2,100 units\text{Sales Price Variance} = (\$4.80 - \$5.00) \times 2,100 \text{ units} Sales Price Variance=(−$0.20)×2,100 units\text{Sales Price Variance} = (-\$0.20) \times 2,100 \text{ units} Sales Price Variance=−$420\text{Sales Price Variance} = -\$420

  3. Determine if the variance is favourable or adverse.

    Since the actual selling price per unit (\4.80)islessthanthebudgetedsellingpriceperunit() is less than the budgeted selling price per unit ($5.00$), the variance is adverse.

    The sales price variance is \420$ adverse. This corresponds to option C.

    The final answer is \boxed{\text{C } \420 adverse}$.

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