Question

Winston Co. had two products code named X and Y. The firm had the following budget for August:

	Product X	Product Y	Total
Sales	$286,000	520,000	$806,000
Variable Costs	189,800	218,400	408,200
Contribution Margin	$96,200	$301,600	$397,800
Fixed Costs	50,000	108,000	158,000
Operating Income	$46,200	$193,600	$239,800
Selling Price per unit	$110.00	$50.00

On September 1, the following actual operating results for August were reported:

	Product X	Product Y	Total
Sales	$360,000	$540,000	$900,000
Variable Costs	195,000	216,000	411,000
Contribution Margin	$165,000	$324,000	$489,000
Fixed Costs	50,000	108,000	158,000
Operating Income	$115,000	$216,000	$331,000
Units Sold	3,000	9,000

Total industry volume for both products X and Y was estimated to be 130,000 units at the time of the budget. Actual industry volume for the period for products X and Y was 100,000 units.

The selling price variance for Product Y is:

		$90,000 favorable.
		$43,200 unfavorable.
		$90,000 unfavorable.
		$35,000 favorable.
		$50,000 unfavorable.

Answer 1

Solution :-
Calculation of Selling Price Variance for Product 'Y'
Details for Product 'Y' as given in Question :-
Selling Price :-
	Budgeted(Standard)			$50
	Actual			540000/90 = $60
Sales Quantity:-
	Actual			9000 Units
Formula :-
Selling Price variance = Actual Sales × (Actual Price - Budgeted Price)
		OR
Selling Price variance = (Actual Sales units × Actual Price) - (Actual Sales units × Actual Price)
Note: If in the above formula, the outcome is positive then it is a favourable variance and if answer is negative it is unfavourable.
Now will put the above figures in the formula:-
	=             9000 × ( $60 - $50)
	=             9000×10
	=             90000 $		(Outcome is positive:Favourable)
	So the selling price variance for Product 'Y' is $ 90000 Favourable.