The master budget at Western Company last period called for sales of 226,700 units at $10.7 each. The costs were estimated to be $3.92 variable per unit and $226,700 fixed. During the period, actual production and actual sales were 231,700 units. The selling price was $10.80 per unit. Variable costs were $6.20 per unit. Actual fixed costs were $226,700. Required: Prepare a sales activity variance analysis.

Question

Business

Giovani

3 December, 10:02

The master budget at Western Company last period called for sales of 226,700 units at $10.7 each. The costs were estimated to be $3.92 variable per unit and $226,700 fixed. During the period, actual production and actual sales were 231,700 units. The selling price was $10.80 per unit. Variable costs were $6.20 per unit. Actual fixed costs were $226,700. Required: Prepare a sales activity variance analysis.

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Answers (1)

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Ayanna Buchanan · Answer 1

Sales activity variance = $33,900 favorable

Explanation:

Sales activity variance is the amount by which budgeted profit would reduced or increased as result of budgeted sales volume been different from actual sales volume

Sales activity variance

Units

Budgeted sales units 226,700

Actual sales units 231,700

5000 favorable

Standard contribution per unit (WK) * $6.78

Sales activity variance $33,900 favorable

Sales activity variance = $33,900 favorable

Working Notes

Standard contribution = standard selling price - standard variable cost

= $10.7 - $3.92 = $6.78