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    Sales Volume Variance - Formula - Analysis - Example

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    Sales Volume Variance - Formula - Analysis - Example

    Uploaded by

    Bob Kane
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    Sales Volume Variance _ Formula _ Analysis _ Example

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    48 views2 pages

    Sales Volume Variance - Formula - Analysis - Example

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    Bob Kane

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    © All Rights Reserved
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    5/2/2021 Sales Volume Variance | Formula | Analysis | Example

    In this chapter (tap to expand)


    Home  Accounting  Standard Costing  Sales Volume Variance
    Sales Volume Variance
        
    Sales volume variance is the change in revenue or profit caused by the difference between actual and budgeted sales units. In other
    words, whether more or less than budgeted units have been sold. It is calculated using two varying approaches as discussed below.
    In order to reconcile actual and budgeted revenue, sales volume variance is calculated as a product of:
    standard price per unit, and
    difference of actual and budgeted sales units
    However, if the intention is to reconcile actual and budgeted profit, sales volume variance is calculated as a product of:
    standard profit per unit, and
    difference of actual and budgeted sales units
    In case of marginal costing we use standard contribution per unit in place of standard profit per unit.
    Formulas
    For revenue reconciliation:
    Sales Volume Variance
    = (Actual Sales Units – Budgeted Sales Units) × Standard Unit Price
    For profit reconciliation (absorption costing):
    Sales Volume Variance
    = (Actual Sales Units – Budgeted Sales Units) × Standard Unit Profit
    For profit reconciliation (marginal costing):
    Sales Volume Variance
    = (Actual Sales Units – Budgeted Sales Units) × Standard Unit Contribution
    Analysis
    Sales volume variance is favorable when actual units sold exceed the budgeted unit sales and it is unfavorable or adverse if units sold
    are less than the budgeted unit sales.
    Sales volume variance if calculated using the above formulas is favorable if the result value obtained is positive and vice versa.
    Possible causes of unfavorable sales volume variance include stiff competition from outsiders or from another product by the
    company itself, poor quality product, higher sales price variance, unrealistic budgeted sales units etc.
    Example
    Calculate sales volume variance using the following information:
    Product x y z
    Actual Sales Units 651,009 419,945 873,344
    Budgeted Sales Units 650,000 410,000 875,000
    Standard Unit Profit 4.00 1.00 9.00
    Solution
    Product x y z
    Actual Sales Units 651,009 419,945 873,344
    – Budgeted Sales Units 650,000 410,000 875,000
    Difference in Units 1,009 9,945 -1,656
    × Standard Unit Profit 4.00 1.00 9.00
    Sales Volume Variance 4,036 9,945 -14,904
    https://xplaind.com/821858/sales-volume-variance 1/2
    5/2/2021 Sales Volume Variance | Formula | Analysis | Example

    Total Sales Price Variance -923


    by Irfanullah Jan, ACCA and last modified on Apr 11, 2019
        

    Related Topics
    Standard Costing
    Sales Price Variance
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