Davidson Corp. produces a single product: fireproof safety deposit boxes for home use. The budget going into the current year anticipated a selling price of $71 per unit.
Because of competitive pressures, the company had to cut selling prices by 10% during
the year. Budgeted variable costs per unit are $48, and budgeted total fixed costs are
$164,000 for the year. Anticipated sales volume for the year was 18,000 units. Actual
sales volume was 5% less than budget. (1) What was the sales price variance for the
year? ​

Sales price variance= $121,410 unfavorable

Explanation:

Giving the following information:

Standard selling price= $71

Actual selling price= 71*0.9= $63.9

Actual number of units sold= 18,000*0.95= 17,100

To calculate the selling price variance, we need to use the following formula:

Sales price variance= (standard price - actual price)*actual quantity

Sales price variance= (71 - 63.9)*17,100

Sales price variance= $121,410 unfavorable

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