The Vargas Company had the following expectations for the year:
$\begin{array}{ll}
\text {Budgeted results for the year were: }\
\text {Total market for the product}&175,000 \mathrm{units}\
\text { Vargas' budgeted sales } & \$ 1,763,125 \
\text { Variable costs per unit } & \$ 18.75 \
\text { Selling price per unit } & \$ 32.50\
\text { Actual results for the year were: }\
\text { Total market for the product}&166,250 \mathrm{units}\
\text { Vargas's actual sales}&56,525\
\text { Total Variable costs}&\$1,073,975\
\text { Total sales}&\$1,752,275
\end{array}$
-
What is Vargas' industry volume variance?
A) $37,296.88.
B) $40,906.25.
C) $35,700.00.
D) $32,550.00.

Question

The Vargas Company had the following expectations for the year:
$\begin{array}{ll}
\text {Budgeted results for the year were: }\
\text {Total market for the product}&175,000 \mathrm{units}\
\text { Vargas' budgeted sales } & \$ 1,763,125 \
\text { Variable costs per unit } & \$  18.75 \
\text { Selling price per unit } & \$  32.50\
\text { Actual results for the year were: }\
\text { Total market for the product}&166,250 \mathrm{units}\
\text { Vargas's actual sales}&56,525\
\text { Total Variable costs}&\$1,073,975\
\text { Total sales}&\$1,752,275
\end{array}$
-
What is Vargas' industry volume variance?
A) $37,296.88.
B) $40,906.25.
C) $35,700.00.
D) $32,550.00.

Quizplus · Accepted Answer

The industry volume variance is calculated as (Budgeted market size - Actual market size) x Budgeted market share x Budgeted contribution margin per unit. Here, it is (175,000 - 166,250) x (56,525 / 175,000) x ($32.50 - $18.75) = $37,296.88.

The Vargas Company Had the Following Expectations for the Year