Comp Wiz sells computers. During May 2017, it sold 350 computers at a $1,200 average price each. The May 2017 fixed budget included sales of 365 computers at an average price of $1,100 each.

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Comp Wiz sells computers. During May 2017, it sold 350 computers at a $1,200 average price each. The May 2017 fixed budget included sales of 365 computers at an average price of $1,100 each. AQ - Actual Quantity SQ Standard Quantity AP Actual Price SP Standard Price (1) Compute the sales price variance and the sales volume variance for May 2017 Flexibl AQ. Assuming the budgeted cost per unit under absorption costing system is $500

Answer:

Sales Price Variance = $35,000 F

Sales volume variance = $9000 A

Explanation:

Sales Price Variance (SPV) = (Actual selling price-Budgeted selling price) Actual sales volume.

SPV = ($1200-$1100) 350

=$35,000 F (Favorable Variance)

Sales Volume Variance (SVV) = (Actual units sold-budgeted sales unit) standard profit

Standard Profit (SP) = $1100-$500

=$600

Hence, SVV = (350-365) $600

=$9000 A (Adverse Variance)

If you are asked to compute Total profit Variance (TPV), here it is below;

TPV = $35,000-$9000

= $26,000