ExpertNet Systems is a startup company that makes connectors

ExpertNet Systems is a? start-up company that makes connectors for? high-speed Internet connections. The company has budgeted variable costs of $150 for each connector and fixed costs of $8,500 per month. ExpertNet?\'s static budget predicted production and sales of 100 connectors in? August, but the company actually produced and sold only 72 connectors at a total cost of $22,000.

ExpertNet?\'s sales volume variance for total costs is

A. $4,200 F.

B. $4,200 U.

C. $2,700 F.

D. $2,700 U.

Solution

Sales volume variance:

= (Actual units sold-Budgeted unit sales)×Variable cost per unit

= (72-100)×150

= -28×150

= $4,200 U

Hence, correct option is B. $4,200 U