Illinois Instruments sells handheld communication devices for $75 during August as a back-to-school special. The normal selling price is $125. The standard variable cost for each device is $95. Sales for August had been budgeted for 400 units nationwide; however, due to the slowdown in the economy, sales were only 300.
The sales price variance and sales volume variance are:
A) Sales price variance $15,000 F, Sales volume variance $12,500 F
B) Sales price variance $15,000 U, Sales volume variance $12,500 U
C) Sales price variance $12,500 F, Sales volume variance $15,000 F
D) Sales price variance $12,500 U, Sales volume variance $15,000 U

Question

Quizplus · Accepted Answer

Sales price variance = (AP F1F1F1S1?F1F1F10 BP) × AQ
= ($75 F1F1F1S1?F1F1F10 $125) × 300
= $15,000 U
Sales volume variance = (AQ F1F1F1S1?F1F1F10 BQ) × BP
= (300 F1F1F1S1?F1F1F10 400) × $125
= $12,500 U

Illinois Instruments Sells Handheld Communication Devices for $75 During August