Answer the following questions using the information below:
Tiger O'Reilly planned to use $85 of material per unit but actually used $82 of material per unit,and planned to make 1200 units but actually made 1000 units.
-The sales-volume variance is:
A)$2400 favourable.
B)$2000 favourable.
C)$17 000 unfavourable.
D)$14 000 unfavourable.

Question

Quizplus · Accepted Answer

The sales-volume variance formula is (actual units sold - budgeted units sold) x budgeted contribution margin per unit. The budgeted contribution margin per unit is calculated as planned revenue per unit - planned cost per unit. 
Planned revenue per unit = $85 material cost per unit + $60 planned profit per unit = $145
Planned cost per unit = $85 material cost per unit
Budgeted contribution margin per unit = $60
Using the above formula, the sales-volume variance is (1000-1200)x$60 = $-17,000 or $17,000 unfavourable.

Answer the Following Questions Using the Information Below