Question

In September, Larson Inc. sold 40,000 units of its only product for $240,000, and incurred a total cost of $225,000, of which $25,000 was fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U; and, sales volume variance, in terms of contribution margin, $27,000U. The sales volume variance, in terms of operating income, for September (to the nearest dollar) was:

Answer 1

The sales volume variance is $20,000 Unfavorable.

Step-by-step explanation:

Particular : Actual ; Flexible Budget ; Variance

Sales : 240,000 ; 300,000 ; 60,000 U

Variable Cost : 200,000 ; 192,000 ; 8,000 U

Contribution Margin : 40,000 ; 108,000 ; 68,000 U

Fixed Cost : 25,000 ; 80,000 ; 55,000 U

Operating Income : 15,000 ; 28,000 ; 20,000U