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ACCA Strategic Professional · Advanced Performance Management · Budgetary planning and control

Dalton Retail's budgeted sales were 5,000 units at $20, with a standard contribution of $8 per unit. Actual sales were 4,600 units at $21. Variable cost per unit was as budgeted at $12. What are the sales price and sales volume (contribution) variances?

The sales price variance is $4,600 favourable, being 4,600 actual units times the $1 higher price. The sales volume contribution variance is $3,200 adverse, being 400 fewer units than budget multiplied by the $8 standard contribution per unit.

  1. APrice $4,600 favourable; volume $3,200 adverseCorrect
  2. BPrice $5,000 favourable; volume $3,200 adverse
  3. CPrice $4,600 favourable; volume $8,000 adverse
  4. DPrice $4,600 adverse; volume $3,200 favourable

Explanation

Price variance = 4,600 x ($21 - $20) = $4,600 favourable. Volume variance = (4,600 - 5,000) x $8 = $3,200 adverse. Option B uses budget units for price; option C values volume at selling price rather than contribution.

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