The Vargas Company had the following expectations for the year:
$\begin{array}{ll}
\text {Budgeted results for the year were: }\
\text {Total market for the product}&175,000 \mathrm{units}\
\text { Vargas' budgeted sales } & \$ 1,763,125 \
\text { Variable costs per unit } & \$ 18.75 \
\text { Selling price per unit } & \$ 32.50\
\text { Actual results for the year were: }\
\text { Total market for the product}&166,250 \mathrm{units}\
\text { Vargas's actual sales}&56,525\mathrm{units}\
\text { Total Variable costs}&\$1,073,975\
\text { Total sales}&\$1,752,275
\end{array}$

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Is the industry volume variance favorable or unfavorable?
A) Unfavorable.
B) Favorable.

Question

The Vargas Company had the following expectations for the year:
$\begin{array}{ll}
\text {Budgeted results for the year were: }\
\text {Total market for the product}&175,000 \mathrm{units}\
\text { Vargas' budgeted sales } & \$ 1,763,125 \
\text { Variable costs per unit } & \$  18.75 \
\text { Selling price per unit } & \$  32.50\
\text { Actual results for the year were: }\
\text { Total market for the product}&166,250 \mathrm{units}\
\text { Vargas's actual sales}&56,525\mathrm{units}\ 
\text { Total Variable costs}&\$1,073,975\
\text { Total sales}&\$1,752,275
\end{array}$

-
Is the industry volume variance favorable or unfavorable?
A) Unfavorable.
B) Favorable.

Quizplus · Accepted Answer

The industry volume variance is unfavorable because the actual market size was lower than the budgeted market size.

The Vargas Company Had the Following Expectations for the Year