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llinois Instruments sells handheld communication devices for $75 during August as a back-to-school special
llinois Instruments sells handheld communication devices for $75 during August as a back-to-school special. The normal selling price is $125. The standard variable cost for each device is $95. Sales for August had been budgeted for 400 units nationwide; however, due to the slowdown in the economy, sales were only 300. The sales price variance and sales volume variance are:
- A. Sales price variance $15,000 F, Sales volume variance $12,500 F
- B. Sales price variance $15,000 U, Sales volume variance $12,500 U
- C. Sales price variance $12,500 U, Sales volume variance $15,000 U
- D. Sales price variance $12,500 F, Sales volume variance $15,000 F
Expert Solution
Sales price variance is as follows;
Sales price variance= Actual quantity sold* (Actual price- Standard price)
= 300* (75- 125)
= 15000 (Unfavorable)
Sales Volume variance is as follows;
Sales volume variance= Standard price* (Actual quantity of sales- Standard quantity of sales)
= 125* (300- 400)
= 12500 (Unfavorable)
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