$\begin{array}{lcc}
\text { Item to Classify } &\text { Standard } &\text {Actual }\
\text { Sales volume } & 100,000 \text { units } &96,000 \text { units }\
\text { Sales price } & \$ 4 \text { per unit }&\$3.90 \text { per unit } \
\text { Material usage } & 40,000 \text { gallons } &42,000 \text { gallons }\
\text { Labor price } & 12.50\text { per hour }&12.45 \text { per hour }
\end{array}$
The sales volume variance was:
A) $16,000 favorable.
B) $16,000 unfavorable.
C) $25,000 unfavorable.
D) $25,000 favorable.

Question

$\begin{array}{lcc}
\text { Item to Classify } &\text { Standard } &\text {Actual }\
\text { Sales volume } & 100,000 \text { units } &96,000 \text { units }\
\text { Sales price } & \$  4 \text { per unit }&\$3.90 \text { per unit }  \
\text { Material usage } &  40,000 \text { gallons } &42,000 \text { gallons }\ 
\text { Labor price } &  12.50\text { per hour }&12.45 \text { per hour }
\end{array}$
 The sales volume variance was:
A) $16,000 favorable.
B) $16,000 unfavorable.
C) $25,000 unfavorable.
D) $25,000 favorable.

Quizplus · Accepted Answer

The formula for sales volume variance is (Actual sales volume - Budgeted sales volume) x Budgeted unit selling price. 
From the information given, we know that the budgeted sales volume was 500 units and the budgeted unit selling price was $50. The actual sales volume was 400 units. 
Using the formula, we can calculate the sales volume variance as follows: 
(400 - 500) x $50 = -$10,000 
A negative variance means that the actual sales volume was less than the budgeted sales volume, and therefore unfavorable. So the correct answer is B) $16,000 unfavorable.

The Sales Volume Variance Was: A) $16,000 Favorable

The Sales Volume Variance Was:
A) $16,000 Favorable