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Revenue variances Lowell Manufacturing Inc. has a normal selling price of $20 per unit and has been selling 125,000 units per

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Answer #1

Answer (a) Compute the normal revenue with a $20 Selling price

Normal Revenue = 125,000*20

= $2,500,000

Answer (b) Planned Revenue = ^Planned Sales * 19

=145,000*19

=$2,755,000

^Planned Sales = 125000 + (125,000*16%)

= 145000

Answer (c) Actual revenue of November = 135,000 *19

= 2,565,000

Answer (d) Revenue Price Variance = (Budgeted Price - Actual Price)*Actual Quantity

=(19-19)*135000

= 0

Answer (e) Revenue Volume Variance = (Budgeted Quantity - Actual Quantity)* Budgeted Selling Price

= (145000-135000)*19

= $192,000(A) i.e adverse

Answer (f) Decreased the selling price to 19 did $65,000(2,565,000-2,500,000) increase in sales revenue, but it did not $255,000(2,755,000-2,500,000) the revenue by 16% as planned.

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