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If actual sales are 1,05,000 units versus budget of 1,00,000 units at standard contribution of ₹20, the sales volume variance is:
A₹5,000 favourable
B₹1,00,000 adverse
C₹1,00,000 favourable
D₹5,000 adverse
Answer & Solution
Correct answer: C. ₹1,00,000 favourable
1. Sales volume variance = (Actual units − Budgeted units) × Standard contribution per unit.
2. Substitute: (1,05,000 − 1,00,000) × 20.
3. = 5,000 × 20.
4. = ₹1,00,000 favourable.
_Source: ICAI BoS Inter Paper 3, Ch 15 "Budget", §15.9.1 Illus 9_
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