Potters Limited uses a standard costing system for all its products. Mugs have a standard selling price of £10 and budgeted total sales for December are 4,000 mugs. The actual selling price for mugs throughout December was £10.50 and the actual number of mugs sold was 3,800. The actual variable costs of producing mugs during December were £5.00 per while the standard variable cost of each mug is £4.75. Based on the above information, what is the sales volume variance for mugs in December?
A) £1,000 Unfavourable
B) £1,050 Unfavourable
C) £1,100 Unfavourable
D) £1,150 Unfavourable

Question

Quizplus · Accepted Answer

The sales volume variance is calculated as (Actual sales volume - Budgeted sales volume) x Standard selling price. Therefore, (3,800 - 4,000) x £10 = -£2,000, which is £1,000 Unfavourable.

Potters Limited Uses a Standard Costing System for All Its