Actual and budgeted information about the sales of a product are presented below for June: (CIA adapted)
$$\begin{array} { | l | r | r | }
\hline & \text { Actual } & \text { Budget } \
\hline \text { Units } & 8,000 & 10,000 \
\hline \text { Sales Revenue } & \$ 92,000 & \$ 105,000 \
\hline
\end{array}$$The sales price variance for June was:
A) $8,000 favorable.
B) $8,000 unfavorable.
C) $10,000 unfavorable.
D) $10,500 unfavorable.

Question

Actual and budgeted information about the sales of a product are presented below for June: (CIA adapted) 
$$\begin{array} { | l | r | r | } 
\hline & \text { Actual } & \text { Budget } \
\hline \text { Units } & 8,000 & 10,000 \
\hline \text { Sales Revenue } & \$ 92,000 & \$ 105,000 \
\hline
\end{array}$$The sales price variance for June was:
A) $8,000 favorable.
B) $8,000 unfavorable.
C) $10,000 unfavorable.
D) $10,500 unfavorable.

Quizplus · Accepted Answer

The sales price variance is calculated as (Actual Sales Price - Budgeted Sales Price) x Actual Units Sold. The actual sales price is $92,000 / 8,000 = $11.50, and the budgeted sales price is $105,000 / 10,000 = $10.50. The variance is ($11.50 - $10.50) x 8,000 = $8,000 favorable.

Actual and Budgeted Information About the Sales of a Product