CIMA BA2 · Chapter 7 · Question 10 of 14
Budgeted sales were 6,000 units but actual sales were 5,200 units. The standard selling price is $50, the standard variable cost is $28 per unit and the standard full production cost is $36 per unit. The company uses STANDARD MARGINAL COSTING. What is the sales volume variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $17,600 adverse
Explanation
Under marginal costing, the sales volume variance is valued at standard contribution per unit: $50 - $28 = $22. Volume shortfall = 6,000 - 5,200 = 800 units. Variance = 800 x $22 = $17,600 adverse. Valuing at standard profit ($50 - $36 = $14) would be the absorption costing variance.
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