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Sales budget at 1,00,000 units × ₹50 unit price = ₹50,00,000. If actual is 95,000 units at the same price, sales variance is:
A₹2,50,000 favourable
B₹2,50,000 adverse
C₹5,00,000 adverse
D₹0
Answer & Solution
Correct answer: B. ₹2,50,000 adverse
1. Budgeted sales value = 1,00,000 × 50 = ₹50,00,000.
2. Actual sales value = 95,000 × 50 = ₹47,50,000.
3. Variance = Actual − Budgeted = 47,50,000 − 50,00,000 = −2,50,000.
4. The shortfall is ₹2,50,000 adverse.
_Source: ICAI BoS Inter Paper 3, Ch 15 "Budget", §15.9 Illus 4_
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