All 38 Variance Analysis questions
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Budgeting & Forecasting › Variance Analysis

What are the sales variances (price and volume)?

Intermediate

Answer

The sales price variance is (actual price - standard price) x actual units sold, measuring the profit effect of selling above/below planned price. The sales volume variance is (actual units - budgeted units) x standard contribution (or standard profit), measuring the effect of selling a different quantity. Together they explain the revenue/contribution difference from plan.
Sales price = (AP - SP) x actual units.
Sales volume = (Actual units - Budget units) x std contribution.
Real-world example Discounting to win volume shows an adverse price but favorable volume variance.

Common follow-ups: What does the sales volume variance measure? | Contribution or profit per unit?

Variance Analysis Flexible Budgets Variance Analysis
All 38 Variance Analysis questions