Question

5. The Following data are for the month of April for the Action Company, a maker...

5. The Following data are for the month of April for the Action Company, a maker of running shoes:

Master Budget date: Sales of 9,000 pairs at $30.00 a pair, variable cost of $23.00 a pair: total fixed costs of $18,000

Actual results: Sales of 9,600 pairs at $29.00 a pair: variable cost of $24.00 a pair, total fixed costs of $18,200

Required:

What were the total sales activity and flexible-budget variances for the month of April?

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Answer #1

Actual Sales Unit = 9,600
Actual Selling Price = $29.00

Budgeted Sales Unit = 9,000
Budgeted Selling Price = $30.00

Total Sales Activity Variance = Budgeted Selling Price * (Budgeted Sales Unit - Actual Sales Unit)
Total Sales Activity Variance = $30.00 * (9,000 - 9,600)
Total Sales Activity Variance = $18,000 Favorable

Total Sales Flexible-budget Variance = Actual Sales Unit * (Actual Selling Price - Budgeted Selling Price)
Total Sales Flexible-budget Variance = 9,600 * ($29.00 - $30.00)
Total Sales Flexible-budget Variance = $9,600 Unfavorable

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