Z Company uses a variable costing system. There was no opening or closing stock. The following data is available:
Use this data to determine Z's sales volume variance:
A) $8000 unfavourable
B) $18 000 unfavourable
C) $60 000 unfavourable
D) $18 000 favourable

Question

Z Company uses a variable costing system. There was no opening or closing stock. The following data is available: 
Use this data to determine Z's sales volume variance:
A) $8000 unfavourable 
B) $18 000 unfavourable 
C) $60 000 unfavourable 
D) $18 000 favourable

Quizplus · Accepted Answer

The formula for sales volume variance in a variable costing system is:
(Sales - (Variable cost per unit x Sales volume)) - (Budgeted sales - (Variable cost per unit x Budgeted sales))
Using the data given in the table:
(Sales - (150 x 10,000)) - (150 x 15,000)
= (1,500,000 - 1,500,000) - (2,250,000)
= -$750,000 or $750,000 unfavourable
Therefore, the answer is B as it is the only option that is closest to the calculated sales volume variance of $750,000 unfavourable.

Z Company Uses a Variable Costing System