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26 April, 09:13

A company had a standard sales price of $1.79 per unit and expected to sell 10,000 units. Due to a downturn in the economy, the product was marked down to $1.59 per unit and the company only sold 9,500 units. Calculate the sales price variance.

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  1. 26 April, 09:19
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    Sales price variance = $1,900.

    Explanation:

    We know,

    Sales price variance = (Standard sales price - Actual sales price) * Actual sales quantity

    Given,

    Standard sales price = $1.79 per unit.

    Actual sales price = $1.59 per unit.

    Actual sales quantity = 9,500 units.

    Putting the values into the formula, we can get

    Sales price variance = (Standard sales price - Actual sales price) * Actual sales quantity

    or, Sales price variance = ($1.79 - $1.59) * 9,500

    or, Sales price variance = $0.2 * 9,500

    or, Sales price variance = $1,900.
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