Question 3 OR (b)
Sales value variances: total, price and volume
12 marks
- Time to write
- About 24 minutes
Question
Question 3 OR (b) · 12 marksFrom the following figures, compute the sales variances (total, price and volume):
| Product/Quantity/Price | Budgeted Units | Budgeted Price (Rs.) | Units, Actual | Actual Price (Rs.) |
|---|---|---|---|---|
| A | 4,200 | 24 | 4,900 | 28 |
| B | 3,100 | 50 | 2,900 | 46 |
| C | 2,000 | 72 | 2,500 | 70 |
| D | 1,100 | 100 | 850 | 104 |
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- computeFormula first, then the working, then the answer with its unit (₹, %, units).
Write it in this order
- Read the data; note exactly what is asked 2 min
- 1 Budgeted and actual sales 3 marks 5 min
- 2 Total sales variance 2 marks 3 min
- 3 Sales price variance 3½ marks 6 min
- 4 Sales volume variance 3½ marks 6 min
- Check: arithmetic, units (₹, %), final answer underlined 2 min
Try it first. About 24 minutes for 12 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Working table (sales value; F = favourable, A = adverse)
| Product | Budgeted units | Budgeted price (₹) | Budgeted sales (₹) | Actual units | Actual price (₹) | Actual sales (₹) | Price variance (₹) | Volume variance (₹) | Total variance (₹) |
|---|---|---|---|---|---|---|---|---|---|
| A | 4,200 | 24 | 1,00,800 | 4,900 | 28 | 1,37,200 | 19,600 (F) | 16,800 (F) | 36,400 (F) |
| B | 3,100 | 50 | 1,55,000 | 2,900 | 46 | 1,33,400 | 11,600 (A) | 10,000 (A) | 21,600 (A) |
| C | 2,000 | 72 | 1,44,000 | 2,500 | 70 | 1,75,000 | 5,000 (A) | 36,000 (F) | 31,000 (F) |
| D | 1,100 | 100 | 1,10,000 | 850 | 104 | 88,400 | 3,400 (F) | 25,000 (A) | 21,600 (A) |
| Total | 5,09,800 | 5,34,000 | 6,400 (F) | 17,800 (F) | 24,200 (F) |
- Total sales variance = Actual sales − Budgeted sales = ₹5,34,000 − ₹5,09,800 = ₹24,200 (F).
- Sales price variance = Actual units × (Actual price − Budgeted price): A 4,900 × 4 = ₹19,600 (F); B 2,900 × 4 = ₹11,600 (A); C 2,500 × 2 = ₹5,000 (A); D 850 × 4 = ₹3,400 (F); total ₹6,400 (F).
- Sales volume variance = Budgeted price × (Actual units − Budgeted units): A 24 × 700 = ₹16,800 (F); B 50 × 200 = ₹10,000 (A); C 72 × 500 = ₹36,000 (F); D 100 × 250 = ₹25,000 (A); total ₹17,800 (F).
Price variance ₹6,400 (F) + Volume variance ₹17,800 (F) = Total variance ₹24,200 (F).
Where the 12 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Budgeted and actual sales | 3 |
| 2 | Total sales variance | 2 |
| 3 | Sales price variance | 3.5 |
| 4 | Sales volume variance | 3.5 |
| Total | 12 |
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