CMA Final · Strategic Cost Management · Variance Analyses
Nair Foods sold 12,000 units in a period against a budget of 10,000 units. Budgeted selling price was Rs 50 and standard cost Rs 35 per unit. Actual sales price was Rs 48. What is the sales margin price variance?
The sales margin price variance is Rs 24,000 Adverse. The selling price was Rs 2 below standard on every one of the 12,000 units actually sold, so the shortfall is 2 x 12,000, not based on budgeted quantity.
- ARs 24,000 AdverseCorrect
- BRs 20,000 Adverse
- CRs 30,000 Favourable
- DRs 24,000 Favourable
Explanation
Sales margin price variance = (actual price - standard price) x actual units = (48 - 50) x 12,000 = Rs 24,000 Adverse. Rs 20,000 wrongly uses budgeted units.
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