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The Ferguson Company estimated that October sales would be 100,000 units with an average selling price of $6.00. Actual sales for October were 105,000 units and average selling price was $5.95.
The sales revenue flexible budget variance was:

A. $5,000 favorable.
B. $5,250 unfavorable.
C. $5,000 unfavorable.
D. $5,250 favorable.

Respuesta :

hamzatauseef

Answer:

B) $5,250 Unfavorable

Explanation:

The sales revenue variance can be calculated by:

Variance = (Budgeted selling price - Actual selling price) * Actual units sold

Variance = (6 - 5.95) * 105,000 = $5250. Unfavorable as if budgeted price was charged it would result in a higher revenue at current level of activity.

The sales volume variance on the other hand is favorable as more units were sold than budgeted.

Hope that helps.

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