Milltown Company sells used cars.During the month,the dealership sold 22 cars at an average price of $15,000 each.The budget for the month was to sell 20 cars at an average price of $16,000.Compute the dealership's sales volume variance for the month.

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 price per unit. In this case, it's (22 cars - 20 cars) * $16,000 = 2 cars * $16,000 = $32,000 favorable, because selling more units than expected is favorable.

Milltown Company Sells Used Cars