mead corporation has prepared a fixed budget based on 6,000 units. their budgeted per unit selling price is $100, variable costs are $75 per unit, and fixed costs are $20,000. if actual sales activity was 5,000 units with revenue of $550,000, what is the sales variance shown on a fixed budget performance report?

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01-12-2022
Business

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mead corporation has prepared a fixed budget based on 6,000 units. their budgeted per unit selling price is $100, variable costs are $75 per unit, and fixed costs are $20,000. if actual sales activity was 5,000 units with revenue of $550,000, what is the sales variance shown on a fixed budget performance report?

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Diatrhi Diatrhi · Answer 1 · 2022-12-06T02:37:18+01:00

Mead corporation has expected sales of 6,000 units of its product with selling price $100 per unit. In realization, Mead is able to record sales of 5,000 units with total revenue $550,000. The sales variance on the fixed budget performane report records $50,000 (F).

Sales variance measures the difference between a company's budgeted product price and the actual price the products sold at. Sales variance is said to be favorable if the actual product price is higher than the budgeted product price.

Sales variance helps a company to determine which products contribute most to the total sales. Sales variance allows a company to decide the next pricing and selling strategy. It provides information about how the market receive and react towards the products.

Sales variance could be calculated by this formula:

Sales variance = (Actual sale price - Budgeted sale price) x Actual units sold

Based on the question, we know some informations:

Budgeted unit sold = 6,000 units

Budgeted sale price = $100 per unit

Actual unit sold = 5,000

Actual total revenue = $550,000

By assuming that total production costs are fixed, we could know the actual sale price is:

Actual total revenue = actual sale price x actual unit sold

$550,000 = actual sale price x 5,000

Actual sale price = $110 per unit

The sales variance recorded on the fixed budget performance report is:

Sales variance = (actual sale price - budgeted sale price) x Actual unit sold

Sales variance = ($110 - $100) x 5,000

Sales variance = $50,000 (F)

Learn more about Sales Variance here: https://brainly.com/question/14316977

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