ACCA Applied Knowledge · Management Accounting · Budgetary control and reporting
Budgeted sales were 5,000 units at $20 each. Actual sales were 5,400 units at $19 each. Budgeted variable cost is $12 per unit. What is the sales volume contribution variance?
The sales volume contribution variance is $3,200 favourable. Actual sales exceeded budget by 400 units, and each unit has a standard contribution of $8 ($20 less $12). The actual selling price is not used because price effects belong in the selling price variance.
- A$3,200 favourableCorrect
- B$3,200 adverse
- C$5,400 adverse
- D$2,700 favourable
Explanation
Volume variance = (5,400 - 5,000) x standard contribution per unit. Standard contribution = 20 - 12 = $8. So 400 x 8 = $3,200 favourable. Using the actual price of $19 would use the wrong contribution per unit.
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