Standard costing — ACCA Practice Question 28

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.

Section A

OceanBreeze, a luxury cruise line, uses standard absorption costing.

How is the sales volume profit variance calculated?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 6

More questions from this exam

Section A OceanBreeze, a luxury cruise line, uses standard absorption costing. How is the sales volume profit variance calculated?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 6

More questions from this exam

Section A

OceanBreeze, a luxury cruise line, uses standard absorption costing.

How is the sales volume profit variance calculated?