CMA Final · Strategic Cost Management · Variance Analyses
Budgeted sales were 1,000 units at Rs 200 with standard cost Rs 140 per unit. Actual sales were 1,100 units at Rs 195. What is the sales margin volume variance?
The sales margin volume variance is Rs 6,000 favourable. Actual sales exceeded budget by 100 units, and each unit carries a standard margin of Rs 60, which is Rs 200 selling price less Rs 140 standard cost.
- ARs 6,000 FavourableCorrect
- BRs 5,500 Adverse
- CRs 6,000 Adverse
- DRs 5,500 Favourable
Explanation
Standard margin per unit = 200 - 140 = Rs 60. Volume variance = (1,100 - 1,000) x Rs 60 = Rs 6,000 Favourable. Price variance (Rs 5 x 1,100 = Rs 5,500 Adverse) is separate.
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