A company's master budget for October is to manufacture and sell 30,000 units for a total of $270,000 with total variable costs of $180,000 and total fixed costs of $24,000.The company actually manufactured and sold 32,000 units and generated $45,000 of operating income in October.The sales volume variance,in terms of operating income,for October is:

Question

Quizplus · Accepted Answer

The sales volume variance is calculated as the difference between the actual units sold and the budgeted units sold, multiplied by the budgeted contribution margin per unit. The budgeted contribution margin per unit is ($270,000 - $180,000) / 30,000 = $3. The variance is (32,000 - 30,000) * $3 = $6,000 favorable.

A Company's Master Budget for October Is to Manufacture and Sell