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ADVANCED COSTING AND MANAGEMENT ACCOUNTING

A car engine manufacturer is trying to make an assessment of its operations for the past year. The
entity operates a standard marginal costing system and manufactures a state-of-the-art engine for
which the following standard revenue and cost data per unit of product is available:
Selling price $60.00
Direct material A 2.5 kg at $8.50 per kg
Direct material B 1.5 kg at $6.00 per kg
Direct labour 0.45 hrs. at $30.00 per hour
Actual data for the twelve-month period was as follows:
Sales and production 48,000 units of the blaster were produced and sold for $2,904,000
Direct material A 121,900 kg were used at a cost of $1,005,675
Direct material B 67,200 kg were used at a cost of $420,000
Direct labour Employees worked for 18,900 hours, but 19,200 hours were paid at a cost

of $585,600.

Budgeted sales for the period were 50,000 units of Product Blaster. A recession last year meant
that the market for the product declined by 5%.
Required:
(a) Calculate the following variances.
(i) Sales volume variance.

Sagot :

anthougo

The Sales Volume Variance of the car manufacturer for the twelve-month period is $96,000.

What is the sales volume variance?

The sales volume variance measures the financial impact of not meeting or exceeding the budgeted sales for a period.

It can be computed by finding the difference between actual and budgeted sales quantities and then multiplied by the unit selling price.

Data and Calculations:

Budgeted sales units = 50,000

Actual sales units = 48,000

Sales price per unit = $60

Actual sales revenue = $2,904,000

Budgeted sales revenue = $3,000,000 ($60 x 50,000)

Sales volume variance = $96,000 ($3,000,000 - $2,904,000)

Thus, the Sales Volume Variance is $96,000.

Learn more about determining the sales volume variances at https://brainly.com/question/4127264

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