XYZ Limited produces Product W. Product W has a standard selling price of £240 and a standard variable cost of £160. During the month of June, sales of Product W produced a favourable sales volume variance of £7,200. Budgeted contribution from sales of Product W for June was £48,000. How many units of Product W were actually sold during June?
A) 510
B) 630
C) 645
D) 690

Question

Quizplus · Accepted Answer

The sales volume variance is calculated as (Actual units sold - Budgeted units sold) x Standard contribution per unit. The standard contribution per unit is £240 - £160 = £80. Given a favourable sales volume variance of £7,200, we have: (Actual units sold - Budgeted units sold) x £80 = £7,200. The budgeted contribution is £48,000, which means the budgeted units sold were £48,000 / £80 = 600 units. Solving for actual units sold: (Actual units sold - 600) x £80 = £7,200, gives Actual units sold = 690.

XYZ Limited Produces Product W