ExpertMedium2 marksMultiple Choice
ACCA · Question 28 · Standard costing
Section A
OceanBreeze, a luxury cruise line, uses standard absorption costing.
How is the sales volume profit variance calculated?
Section A
OceanBreeze, a luxury cruise line, uses standard absorption costing.
How is the sales volume profit variance calculated?
Answer options:
A.
(Actual sales volume - Budgeted sales volume) × Actual profit per unit
B.
(Actual sales volume - Budgeted sales volume) × Standard profit per unit
C.
(Actual sales volume - Budgeted sales volume) × Standard contribution per unit
D.
(Actual selling price - Standard selling price) × Actual sales volume
How to approach this question
Identify the costing system (absorption). Under absorption costing, profit is the key metric, so volume differences are multiplied by standard profit.
Full Answer
B.(Actual sales volume - Budgeted sales volume) × Standard profit per unit✓ Correct
The sales volume variance measures the impact on profit of selling a different quantity than budgeted. Under standard absorption costing, this is calculated as the difference in volume (Actual units - Budgeted units) multiplied by the Standard Profit per unit. (Note: Under marginal costing, it would be multiplied by standard contribution per unit).
Common mistakes
Selecting standard contribution per unit (Option C), which is only correct for marginal costing.
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