Metal Cabinet Company manufactures two and four drawer filing cabinets.The actual units sold (5,000)equalled the expected units to be sold for both products.The four drawer cabinets constitute 66 percent of the budgeted sales mix.The budgeted selling price is $30 for four drawer cabinets and $15 for two drawer cabinets.What is the sales-quantity variance?

Question

Quizplus · Accepted Answer

The sales-quantity variance is calculated as follows:
Actual units sold x (Actual mix percentage - Budgeted mix percentage) x Budgeted selling price

Since actual units sold equal budgeted units sold and the budgeted mix percentage for four drawer cabinets is 66 percent, the actual mix percentage for two drawer cabinets is 34 percent. Therefore, the sales-quantity variance is:

5,000 x (34% - 34%) x $15 + 5,000 x (66% - 66%) x $30 = $0

Option A is the correct answer as the sales-quantity variance is $0.

Metal Cabinet Company Manufactures Two and Four Drawer Filing Cabinets