Question

The master budget at Western Company last period called for sales of 226,700 units at $10.7 each. The costs were estimated to be $3.92 variable per unit and $226,700 fixed. During the period, actual production and actual sales were 231,700 units. The selling price was $10.80 per unit. Variable costs were $6.20 per unit. Actual fixed costs were $226,700. Required: Prepare a sales activity variance analysis.

Answer 1

Answer:

Sales activity variance =  $33,900  favorable

Explanation:

Sales activity variance is the amount by which budgeted  profit would reduced or increased as result of budgeted sales volume been different from actual sales  volume

Sales activity variance                              

                                                                              Units

Budgeted sales units                                        226,700

Actual sales units                                           231,700

                                                                            5000 favorable

Standard contribution per unit(WK)                   ×$6.78

Sales activity variance                                    $33,900  favorable

Sales activity variance =  $33,900  favorable

Working Notes

Standard contribution = standard selling price - standard variable cost

= $10.7 - $3.92= $6.78