Assume that Casio Computer Company, LTD. sells handheld communication devices fo

Question

Assume that Casio Computer Company, LTD. sells handheld communication devices for $110 during August as a back-to-school special. The normal selling price is $150. The standard variable cost for each device is $70. Sales for August had been budgeted for 400,000 units nationwide; however, due to the slowdown in the economy, sales were only 350,000. Compute the revenue, sales price, sales volume, and net sales volume variances. Compute the revenue, sales price, sales volume, and net sales volume variances.

Explanation / Answer

a) Revenue variance = Actual units* (selling price - cost) - Budgeted units *(selling price - cost)

= 350000* ($110 - $70) - 400000($150- $70)

= $14000000 - $32000000

= - $18000000

b) Sales price Variance = (Actual price - budgeted price) * Actual sales units

   = ( $110 - $150) * 350000

   = -$14000000

c) sales Volume variance = (Actual units - budgeted units) * budgeted price

   = (350000 - 400000 ) * $150

   = - $7500000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.