CA Intermediate · Cost and Management Accounting · Standard Costing
Gupta Plastics budgeted sales of 5,000 units at a standard selling price of Rs 120 and standard cost of Rs 90 per unit. Actual sales were 5,400 units at Rs 118 per unit. Sales margin volume variance is:
Sales margin volume variance is Rs 12,000 Favourable. Actual sales exceeded budget by 400 units, and each unit carries a standard margin of Rs 30 (Rs 120 less Rs 90). The selling price difference is a separate price variance.
- ARs 12,000 FavourableCorrect
- BRs 10,800 Adverse
- CRs 48,000 Favourable
- DRs 8,000 Favourable
Explanation
Standard margin per unit = 120 - 90 = Rs 30. Volume variance = (5,400 - 5,000) x Rs 30 = Rs 12,000 Favourable. Rs 48,000 results from wrongly using the selling price of Rs 120, and the price difference of Rs 2 belongs to the sales margin price variance.
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