ACCA Applied Knowledge · Management Accounting · Budgetary control and reporting
Delta Co budgeted sales of 8,000 units at $25 each. Actual sales were 8,500 units at $24 each. What is the total sales revenue variance?
The total sales revenue variance is $4,000 favourable, because actual revenue of $204,000 (8,500 units at $24) exceeds budgeted revenue of $200,000 (8,000 units at $25). Higher volume more than offset the lower selling price.
- A$4,000 adverse
- B$4,500 favourableCorrect
- C$8,500 adverse
- D$12,500 favourable
Explanation
Budgeted revenue = 8,000 x 25 = $200,000. Actual revenue = 8,500 x 24 = $204,000. The difference is $4,000 favourable. Option $4,500 is wrong: it comes from the price variance alone ($8,500 adverse) ignoring volume, so it does not reconcile.
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