Section A

AutoParts Manufacturing budgeted to sell 10,000 units at a standard profit of $12 per unit. Actual sales were 11,500 units. What is the sales volume profit variance?

Answer options:

$18,000 Adverse

$18,000 Favorable

$138,000 Favorable

$120,000 Favorable

How to approach this question

Find the difference between actual sales volume and budgeted sales volume. Multiply by the standard profit per unit.

Full Answer

B.$18,000 Favorable✓ Correct

Sales Volume Profit Variance measures the impact of selling a different quantity than budgeted. Difference in volume = 11,500 - 10,000 = 1,500 units. 1,500 units * $12 standard profit = $18,000 Favorable.

Common mistakes

Using standard revenue instead of standard profit, or getting the sign wrong.

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Practice the full ACCA MA — Management Accounting Practice Exam 3

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