A company expected to sell 10,000 units at a standard price of $1.79, but actually sold 9,500 units at $1.59. What is the sales price variance?

A company expected to sell 10,000 units at a standard price of $1.79, but actually sold 9,500 units at $1.59. What is the sales price variance?

• A. $1,900 F
• B. $1,900 U
• C. $-1,900 U
• D. $0

Answer: (B)

Sales price variance shows how much revenue is affected by selling at a price different from what was planned, using the actual quantity sold. Compute it as (Actual selling price − Standard selling price) × Actual units sold. Here, the standard price is 1.79 and the actual price is 1.59, so the price difference is -0.20. Multiply by the actual units sold: 9,500 × (-0.20) = -1,900. The negative result means the company earned less per unit than planned, which is unfavorable. The magnitude is $1,900, so the correct interpretation is a $1,900 unfavorable variance. If the actual price had been higher than the standard, the variance would be a positive (favorable) amount.

Sales price variance shows how much revenue is affected by selling at a price different from what was planned, using the actual quantity sold. Compute it as (Actual selling price − Standard selling price) × Actual units sold. Here, the standard price is 1.79 and the actual price is 1.59, so the price difference is -0.20. Multiply by the actual units sold: 9,500 × (-0.20) = -1,900. The negative result means the company earned less per unit than planned, which is unfavorable. The magnitude is $1,900, so the correct interpretation is a $1,900 unfavorable variance. If the actual price had been higher than the standard, the variance would be a positive (favorable) amount.