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A company's master budget for October is to manufacture and sell 30,100 units, for a total sales revenue of $272,000, total variable costs of $178,690, and total fixed costs of $24,200
A company's master budget for October is to manufacture and sell 30,100 units, for a total sales revenue of $272,000, total variable costs of $178,690, and total fixed costs of $24,200. The company actually manufactured and sold 32,100 units, and generated $46,000 of operating income in October.
The sales volume variance, in terms of operating income, for October (rounded to the nearest whole dollar) was:
Expert Solution
Computation of Sales Volume Variance:
Sales Volume Variance = (Actual Unit Sold - Budgeted Unit Sold) * Budgeted Price per Unit
Here,
Budgeted price per unit =($272,000-$178,690)/30,100
=$93,310/30,100
= $3.1
Sales Volume Variance = (32100 - 30100) * $3.10
= 2000*$3.10
= $6,200 favorable
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