The only variances are selling price variances.?
Planning (selling price) variance??
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$ per unit?
Original budgeted sales price? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 10.00?
Revised budgeted sales price? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? 4.50?
Sales price planning variance? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?5.50 (A)?
The planning variance is adverse because the revised sales price is lower than the sales price in the?original budget. As a result, actual profit will not achieve the budgeted profit level.?
The total sales price planning variance is obtained by multiplying the planning variance per unit by the?actual number of units sold (not the budgeted number of units sold).?
Sales price planning variance = $5.50 per unit (A) × 12,000 units sold??= $66,000 (A).?
Operational (selling price) variance?
The sales price operational variance is calculated in the same way as a 'normal' sales price variance,?except that the sales price in the revised budget is used, not the original budget.??
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? $?
12,000 units sold for (12,000 × $5)? ? ? ? ? ? ? ? ? ? ? ? 60,000?
They should have sold for (× $4.5)? ? ? ? ? ? ? ? ? ? ? ? ?54,000?
Operational (selling price) variance? ? ? ? ? ? ? ? ? ? ? ? ? 6,000 (F)?