Question

The next year's budget for Trend, Inc., a multi-product company, is given below:

Product A Product B

Sales $ 1,890,000 $ 1,377,000

Variable costs 926,100 596,700

Fixed costs 500,000 500,000

Net income 463,900 280,300 Units 252,000 108,000

At the end of the year, the total fixed costs and the variable costs per unit were exactly as budgeted, but the following units per product line were sold. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company.

Product Lines Units Sales

A 253,230 $ 1,848,579

B 113,770 $ 1,479,010

What is the total sales price variance?

Answer #1

**Note :**

**1) Budgeted Sales Price per unit =** Budgeted
Sales / Budgeted units

**For Product A**= $1,890,000 / 252,000 units =**$7.50 per unit****For Product B =**$1,377,000 / 108,000 units =**$12.75****per unit**

**2 ) Actual** **Sales Price per unit
=** Actual Sales / Budgeted units

**For Product A**= $ 1,848,579 / 253,230 units =**$7.30 per unit****For Product B =**$ 1,479,010 / 113,770 units =**$13****per unit**

**Answer**

**Sales Price Variance =**( Actual Sales Price per
unit - Budgeted Sales Price per unit ) * Actual units sold

Products | Actual Sales Price per unit ($) | - | Budgeted Sales Price per unit ($) | * | Actual units sold | Sales Price Variance |
Favorable / Unfavorable |
---|---|---|---|---|---|---|---|

A | 7.30 | - | 7.50 | * | 253,230 units | $50,646 |
Unfavorable |

B | 13 | - | 12.75 | * | 113,770 units | $28,442.50 |
Favorable |

Total sales price variance |
$22,203.50 |
Unfavorable |

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