The following information is available for the XYZ Company for the month of July: Static Budget Actual
Units 7,000 6,650
Sales revenue $60,000 $55,715
Variable manufacturing costs $15,000 $14,250
Fixed manufacturing costs $20,000 $17,000
Variable selling & administrative expense $10,000 $10,500
Fixed selling & administrative expense $15,000 $12,000
The total sales-volume variance for operating income for the month of July would be:

XYZ Company

The total sales-volume variance for operating income for the month of July would be:

$3,765 Favorable

Explanation:

a) Data and Calculations:

                                                             Static Budget        Actual  

Units                                                           7,000               6,650    

Sales revenue                                          $60,000        $55,715

Variable manufacturing costs                  $15,000       $14,250

Fixed manufacturing costs                     $20,000        $17,000

Variable selling & administrative exp.    $10,000        $10,500

Fixed selling & administrative expense $15,000        $12,000

                                                            Flexible Budget    Actual  

Units                                                              6,650           6,650    

Sales revenue  = $57,000($60,000/7,000 * 6,650) $55,715

Variable manufacturing costs = $14,300 ($15,000/7,000 * 6,650)       $14,250

Fixed manufacturing costs                     $20,000        $17,000

Variable selling & administrative exp. =$9,500 ($10,000/7,000 * 6,650)       $10,500

Fixed selling & administrative expense $15,000        $12,000

                                                             Flexible Budget    Actual    Variance

Units                                                              6,650           6,650      

Sales revenue                                          $57,000        $55,715     $1,285 U

Variable manufacturing costs                  $14,300       $14,250             50 F

Fixed manufacturing costs                     $20,000        $17,000       3,000 F

Variable selling & administrative exp.      $9,500        $10,500       1,000 U

Fixed selling & administrative expense $15,000        $12,000       3,000 F

Operating income                                    ($1,800)          $1,965     $3,765 F

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