The Ferguson Company estimated that October sales would be 100,000 units with an average selling price of $6.00. Actual sales for October were 105,000 units and average selling price was $5.95. The sales price variance was:
A) $5,000 favorable.
B) $5,000 unfavorable.
C) $5,250 favorable.
D) $5,250 unfavorable.

Question

Quizplus · Accepted Answer

Sales price variance = (actual selling price - budgeted selling price) x actual sales volume
= ($5.95 - $6.00) x 105,000
= -$0.05 x 105,000
= -$5,250
Based on the negative result, the variance is unfavorable. Therefore, the answer is D, $5,250 unfavorable.

The Ferguson Company Estimated That October Sales Would Be 100,000