CMA Final · Strategic Cost Management · Variance Analyses
Ganga Appliances budgeted sales of 5,000 units at Rs 400 with a standard cost of Rs 300 per unit. Actual sales were 5,400 units at Rs 390. What is the sales margin price variance?
The sales margin price variance is Rs 54,000 Adverse. Actual selling price was Rs 10 below the standard Rs 400, and this shortfall applies to all 5,400 units actually sold.
- ARs 54,000 AdverseCorrect
- BRs 54,000 Favourable
- CRs 40,000 Favourable
- DRs 50,000 Adverse
Explanation
Sales margin price variance = (actual price - standard price) x actual quantity = (390 - 400) x 5,400 = Rs 54,000 Adverse. Option C is the volume variance (400 x 100), not price.
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