Question 16.TQ.12: Milton Limited has produced the following information: Total...
Milton Limited has produced the following information:
Total actual sales: £99,000.
Actual quantity sold: 9000 units.
Budgeted selling price per unit: £10.
Standard cost per unit: £7.
Total budgeted units: 10,000 units.
Required:
Calculate:
(a) the selling price variance
(b) the sales volume profit variance
(c) the sales variance in total.
Selling price variance for Milton Ltd:
(a) Selling price variance:
\left[Actual sales revenue-\left(actual quantity\times standard cost per unit\right) \right] £9000 (F)- \left(actual quantity \times standard profit per unit\right) =\left[£99000-\left(9000 \times £7\right) \right] -\left(9000\times £3^{W} \right) =
^W£10-3
(b) Sales volume profit variance:
(Actual quantity – budgeted quantity) × standard profit = (9000 units – 10000) × £3 = £3000 (A)
(c) Sales variance = £9000 (F) + 3000 (A) = £6000 (F)