Sales Value Method

Sales Value Method

(i)                 Sales Value Variance:

It is difference between standard

Or

Budgeted sales and the actual sales

Sales Value Variance               = Standard sales – Actual sales

Note: Standard Sales    = Standard sales * Actual quantities of sales

If actual sales are more than the budgeted or standard sales, a favourable variance would result and vice versa.

ii) Sales Price Variance:

If is that portion of the sales value variance which is due to the difference between standard price specified and the actual price charged.

Sales Price Variance    = Actual quantity Sold (Standard Price – Actual          Price)

iii) Sales Volume Variance

This is the difference between the budgeted sales and the standard value of the actual mix of sales.

Sales Volume Variance = Standard Price (Actual Quantity – Standard Quantity)

Or

= Budgeted Sales – Standard Sales

If actual sales at standard price exceed the budgeted sales, there is a favourable variance and vice versa.

Thus, Sales Value Variance = Price Variance + Volume Variance

The volume variance can further be analyzed into

(a)    Mix Variance and

(b)   Quantity Variance