If the actual selling price is $400, the actual result is $250, and 500 actual units are sold, the selling price variance is __________?
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Answer: C. $75,000
Explanation
Selling price variance equals the price difference multiplied by actual units sold. Subtracting the budgeted price from the actual price of four hundred gives the variance component. Multiplying this price difference by five hundred actual units sold yields seventy-five thousand. Selling price variance isolates the impact of charging prices different from budgeted standards. Sales managers analyze this variance to understand market pricing power and customer response. Calculating price variances helps firms adjust marketing and pricing tactics dynamically.
Retail executives review selling price variances to measure the success of promotional markups. Competitive markets require close monitoring of price variances to avoid losing market share. Understanding price variances helps companies forecast future revenue streams with greater precision. Option A underestimates the variance by using incorrect unit volume multipliers. Option B results from a calculation error during the price difference multiplication step. Option D represents an incorrect arithmetic result not supported by the given data.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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