Business – 5.5 Budgets – Variances | e-Consult
5.5 Budgets – Variances (1 questions)
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Answer:
- Sales Volume Variance (SVV)
SVV = (Actual Quantity – Budgeted Quantity) × Budgeted Price
| Actual Quantity | 9,200 units |
| Budgeted Quantity | 8,000 units |
| Budgeted Price | £25 |
| SVV | £30,000 Favourable |
- Sales Price Variance (SPV)
SPV = (Actual Price – Budgeted Price) × Actual Quantity
| Actual Price | £24 |
| Budgeted Price | £25 |
| Actual Quantity | 9,200 units |
| SPV | £9,200 Unfavourable |
- Total Sales Variance (TSV)
TSV = Actual Revenue – Budgeted Revenue
| Actual Revenue | 9,200 × £24 = £220,800 |
| Budgeted Revenue | £200,000 |
| TSV | £20,800 Favourable |
The favourable total variance results from the larger volume outweighing the lower selling price.