Question

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

Answer 1

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