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Nodefect Inc. manufactures family cars. Below is the static budget and actual results for last year. What is the total sales-volume variance for last year?  Static budget Actual resultsUnits sold 650 700Sales price per unit $27,999 $28,999Variable manufacturing cost per unit $21,950 $22,850Contribution margin (in total) $3,931,850 $4,304,300Fixed manufacturing costs $2,805,000 $2,857,200Operating profit $1,126,850 $1,447,100

Question

Nodefect Inc. manufactures family cars. Below is the static budget and actual results for last year. What is the total sales-volume variance for last year?  Static budget Actual resultsUnits sold 650 700Sales price per unit 27,99927,999 28,999Variable manufacturing cost per unit 21,95021,950 22,850Contribution margin (in total) 3,931,8503,931,850 4,304,300Fixed manufacturing costs 2,805,0002,805,000 2,857,200Operating profit 1,126,8501,126,850 1,447,100

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Solution

The sales volume variance is calculated by taking the difference between the actual quantity sold and the budgeted quantity, and multiplying it by the standard price per unit.

Here's how you calculate it:

  1. Find the difference in quantity: Actual quantity sold - Budgeted quantity sold = 700 units - 650 units = 50 units

  2. Multiply this difference by the standard price per unit: 50 units * 27,999/unit=27,999/unit = 1,399,950

So, the total sales volume variance for last year is $1,399,950.

This problem has been solved

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