Break down each static-budget variance into a flexible-budget variance and a sales-volume variance. 3. Calculate the selling-price variance. 4. Assume the role of management accountant at Luster. How would you present the results to Sam Adler? Should he be more concerned? If so, why? Answer : 1.
The flexible budget variances are the difference between actual result and flexible budgetâ€™s figures. The sales volume variances are the difference between flexible budgetâ€™s figures and static budgetâ€™s figures. The static budget variances are the difference between actual result and static budgetâ€™s figures. The calculation of static-budget variance in units, revenues, variable manufacturing costs, and contribution margin along with their percentages is shown below: Following formulas are used for the calculation of variances: 2.
The static budget variance is the sum of flexible budget variance and sales volume variance. The breakdown of static budget variance into flexible budget variance and sales volume variance is shown below: Following formulas are used for the calculation of variances: 3. The selling price variance is calculated by multiplying the actual quantity with the difference of actual price and budgeted price. The calculation of selling price variance is shown below:
Therefore, the selling price variance is $17,750 U.