Question

Master Products has the following information for the year just ended:

Budget Actual
Sales in units 15,000 14,000
Sales $150,000 $147,000
Less: Variable expenses 90,000 82,600
Contribution margin $ 60,000 $ 64,400
Less: Fixed expenses 35,000 40,000
Operating income $ 25,000 $ 24,400
The company's sales-price variance is:
A. $3,000 unfavorable.
B. $7,000 unfavorable.
C. $7,000 favorable.
D. $7,500 unfavorable.
E. $7,500 favorable.

Answer 1

The sales-price variance for Master Products is $3,000 unfavorable.

Step-by-step explanation:

The sales-price variance can be calculated by finding the difference between the budgeted sales and the actual sales. In this case, the budgeted sales were $150,000 and the actual sales were $147,000. Therefore, the sales-price variance is $150,000 - $147,000 = $3,000. Since the actual sales were lower than the budgeted sales, the variance is unfavorable. So, the correct answer is A. $3,000 unfavorable.