Sales Variances
Assume that Casio Computer Company, LTD. sells handheld
communication devices for $130 during August as a back-to-school
special. The normal selling price is $160. The standard variable
cost for each device is $80. Sales for August had been budgeted for
600,000 units nationwide; however, due to the slowdown in the
economy, sales were only 550,000.
Compute the revenue, sales price, sales volume, and net sales
volume variances.
| Revenue variance | Answer AnswerFU |
| Sales price variance | Answer AnswerFU |
| Sales volume variance | Answer AnswerFU |
| Net sales volume variance | Answer AnswerFU |
Revenue Variance = Actual sale Revenue - Standard sale Revenue
= 550000 units x $130 - 600000 units x $160
= $71500000 - $96000000
= - $24500000 U
Sale price Variance = (Actual sale price - Standard sale price) x Actual number of devices sold
= ($130 - $160) x 550000
= - $16500000 U
Sale Volume Variance = (Actual Units - Standard Units) x Standard sale price
= (550000 - 600000) x $160
= - $8000000 U
Net sale Volume Variance = (Actual Units - Standard Units) x Standard profit per unit
= (550000 - 600000) x $160 - $80
= 50000 x $80
= - $4000000 U
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