A company is analyzing its sales volume variance. Budgeted sales were 10,000 units at $50 per unit. Actual sales were 11,000 units at $48 per unit. What is the Sales Volume Variance?

Answer options:

$20,000 Unfavorable

$50,000 Favorable

$48,000 Favorable

$22,000 Unfavorable

How to approach this question

Formula: Sales Volume Variance = (Actual Quantity - Budgeted Quantity) × Budgeted Price.

Full Answer

B.$50,000 Favorable✓ Correct

Sales Volume Variance measures the impact of the difference in volume, valued at the standard (budgeted) price. (11,000 units - 10,000 units) × $50/unit = $50,000 Favorable.

Common mistakes

Using Actual Price in the volume variance calculation.

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