Page 198 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 9: Variance Analysis

Sales Price Variance = Actual Quantity (Actual Price – Standard Price) Notes

SPV(A) = (` 18 – ` 15) 880 = ` 2,640 (Favourable)
SPV(B) = (` 20 – ` 20)880 = 0
SPV(C) = (` 38 – ` 40) 2640 = ` 5280 (Adverse)
Total SPV = ` 2,640 (Adverse)

Sales Volume Variance= Standard Price (Actual Quantity – Standard Quantity)
SVoV(A) = ` 15 (880 – 1200) = ` 4800 (Adverse)
SVoV(B) = ` 20(880 – 800) = ` 1,600 (Favourable)
SVoV(C) = ` 40(2640 – 2000) = ` 25,600 (Favourable)
Total Sales Volume Variance = ` 22,400(Favourable)

Sales Mix Variance = Standard Price (Actual Quantity – Revised Standard Quantity)

Revised Standard Quantity computation
Standard Quantity
RSQ = × Total Actual Quantity
Total Standard Quantity

The first step is to find out the total standard quantities and actual quantities.
Total Actual Quantities = 880 + 880 + 2640 = 4400 units
Total Standard Quantities = 1200 + 800 + 2000 = 4000 units
1200
RSQ(A) = × 4400 = 1320 units
4000
800
RSQ (B) = × 4400 = 880 units
4000
2000
RSQ (C) = × 4400 = 220 units
4000
SVoV(A) = ` 15 (880 – 1200) = ` 4800 (Adverse)

S M V (A) = ` 15(880 – 1320) = 6600(Adverse)
S M V(B) = ` 20(880 – 880) = 0
S M V(C) = ` 40(2640 – 2200) = 17,600 (Favourable)
11,000 (Favourable)

Sales Sub-usage Variance
= Standard Price (Revised Standard Quantity – Standard
Quantity)
SSV(A) = ` 15(1320 – 1200) = ` 1,800 (Favourable)
SSV(B) = ` 20(880 – 800) = ` 1600 (Favourable)

SSV(C) = ` 40(2200 – 2000) = ` 8,000 (Favourable)
Total SSV ` 11,400 (Favourable)

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