# Comp Wiz sells computers. During May 2015, it sold 600 computers at a $900 average price each.... ## Question: Comp Wiz sells computers. During May 2015, it sold 600 computers at a$900 average price each. The May 2015 fixed budget included sales of 650 computers at an average price of $880 each. Compute the sales price variance and the sales volume variance for May 2015. ## Variance Variance is the result of comparison between actual and standard amounts. Examples are rate and quantity variances which could be favorable and unfavorable. ## Answer and Explanation: Sales price variance is computed as follows: Sales price variance = (Budgeted price - Actual price) * Actual units sold Sales price variance = ($880 - $900) * 600 units Sales price variance =$12,000 favorable

Sales volume variance is computed as follows:

Sales volume variance = (Budgeted units - Actual units) * Budgeted price

Sales volume variance = (650 - 600) * $880 Sales volume variance =$44,000 unfavorable

Because we're computing for variances related to sales, higher units and selling price compared to budget would be favorable. 