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Comp Wiz sells computers
Comp Wiz sells computers. During May, it sold 500 computers at a $900 average price each. The May fixed budget included sales of 550 computers at an average price of $860 each. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price 1&2. Compute the sales price variance and the sales volume variance for May. Classify it as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Actual Flexi Budget Budgeted Sales
Expert Solution
Actual quantity = 500 computers
Standard quantity = 550 computers
Actual price = $900 per computer
Standard price = $860 per computer
Sales price variance = Actual quantity x (Actual price - Standard price)
= 500 x (900 - 860)
= $20,000 (Favorable)
in the above case the concept is co. think we sell computers at $860 each , in may but actully co. sell $900 rate each computer so co. sell at more price which think so its favorable
Sales volume variance = Standard price x (Actual quantity - Standard quantity)
= 860 x (500 - 550)
= $43000 (Unfavorable)
in the above case the concept is co. think we sell 550 computers , in may but actully co.500 sell computer so co. sell less computers which think so its unfavorable.
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