Question

    A firm budgeted sales of ₹120 lakh but achieved actual

    sales of ₹100 lakh. Variable cost was budgeted at 60% of sales, and actual cost was 62% of actual sales. Calculate the sales variance and interpret its implication.
    A ₹20 lakh adverse Correct Answer Incorrect Answer
    B ₹22 lakh favourable Correct Answer Incorrect Answer
    C ₹18 lakh favourable Correct Answer Incorrect Answer
    D ₹10 lakh adverse Correct Answer Incorrect Answer
    E ₹15 lakh neutral Correct Answer Incorrect Answer

    Solution

    Sales Variance=Actual Contribution–Budgeted Contribution = ₹38L–₹48L=–₹10lakh

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