Concord Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 1,820 kits was prepared for the year. Fixed operating expenses account for 73% of total operating expenses at this level of sales.

Sales $87,000

Cost of goods sold (all variable) 52,200

Gross margin 34,800

Operating expenses 30,450

Operating income $ 4,350

Assume that during the year Concord Sports actually sold 1,827 volleyball kits during the year at a price of $42 per kit.

Calculate the sales price variance.

Sales price variance = $10,596.6 unfavorable

Explanation:

Giving the following information:

The following static budget based on sales of 1,820 kits was prepared for the year.

Sales $87,000

Assume that Concord Sports sold 1,827 volleyball kits during the year for $42 per kit.

First, we need to calculate the standard selling price:

Standard selling price = 87,000/1,820 = $47.80

The sales price variance is calculated as follow:

Sales price variance = actual sales revenue - actual sales at the standard price

Sales price variance = (1,827*42) - (1,827*47.8) = $10,596.6 unfavorable