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Dexter PC estimates sales of 20,000 tool kits at $35 per tool kit in June. During June, 15,000 tool kits were sold for total revenue of $705,000.
-What is the sales volume variance?
A) $175,000 favorable
B) $175,000 unfavorable
C) $180,000 favorable
D) $180,000 unfavorable
E) none of the above

Question

Use the following information to answer questions 
Dexter PC estimates sales of 20,000 tool kits at $35 per tool kit in June. During June, 15,000 tool kits were sold for total revenue of $705,000.
-What is the sales volume variance?
A) $175,000 favorable
B) $175,000 unfavorable
C) $180,000 favorable
D) $180,000 unfavorable
E) none of the above

Quizplus · Accepted Answer

The sales volume variance is calculated as the difference between the expected sales volume and the actual sales volume, multiplied by the standard selling price per unit. Expected sales were 20,000 units at $35 each, so expected revenue was $700,000 (20,000 * $35). Actual revenue was $705,000, but this is not directly relevant for the volume variance, which focuses on the difference in units sold. The actual sales were 15,000 units, so the company sold 5,000 units less than expected (20,000 - 15,000). The variance is therefore 5,000 units * $35 = $175,000. Since the company sold fewer units than expected, this is unfavorable.

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