Question

Smith Wholesale budgeted sales price is $40 per unit for an budgeted sales volume of 5,000 units. The actual performance was 5,500 units at an average sales price of $39.75. The total dollar amount of their flexible budget sales volume variance is $_____, assuming there are no cost variances.

Answer 1

$20,000 Favorable

Step-by-step explanation:

As for the provided information, we have:

Sales Volume Variance is defined as the variance arising due to difference in sales quantity based on standard price.

Formula for the above = (Actual Sales - Budgeted Sales)
`*` Standard Price

= (5,500 - 5,000)
`*` $40

= $20,000

This variance shall be categorized as favorable, as the actual sales quantity is more than the static budgeted quantity.

Therefore, Sales Volume Variance = $20,000 Favorable