Question

Robin Machine Company provides the following particulars for the current year: Actual selling price $1,500 Budgeted selling price $1,750 Actual units sold 1,000 units Budgeted sales 800 units What is the selling-price variance at Robin Machine Company for the current year?

Answer 1

$250,000F

Step-by-step explanation:

Variance is the difference between standard and actual costs. Standard cost can also be referred to as Budgeted cost. In the tree of variances, there are two major branches of variances:- Sales Variances and Production Variances. Under the sales variances, there are also two branches which include the sales volume(Profit Margin) Variance which involves quantity sold and the Sales Price Volume involving selling price.

In calculating sales or selling price variance, the actual quantity, selling price at standard and selling price at actual are needed.

This can be denoted as:- AQ(SP - AP)

AQ here, represents the actual quantity sold, SP represents selling price at standard and AP represents selling price at actual.

Now, we can solve the problem using the above stated formula.

Sales or selling price variance = Actual units sold( Budgeted selling price - Actual selling price)

= 1,000 units( $1,750 - $1,500)

= 1,000 units($250)

= $250,000F. This "F" attached to it means Favourable. In revenue, if actual cost is greater than standard cost, then the variance is a favourable one.