Sales price variance measures the change in a company's total budgeted revenue to the actual revenue earned on a product. To figure the selling price variance, you need to know how many units you made, how much you expected to sell the units for, and the price at which you actually sold the units. A negative sales price variance means the product sold for a lower price than anticipated, and a positive sales price variance means the product sold for a higher price than anticipated.
Multiply the expected sales price by the number of units expected to be sold to find the total expected revenue. For example, if a company builds 300 units of a product, expecting to sell them at $90 each, multiply 300 by $90 to find the expected revenue equals $27,000.
Multiply the actual sales price by the number of units sold to find the total actual revenue. For example, if the company built 300 widgets and sold them at $85 each, multiply 300 by $85 to find the actual revenue equals $25,500.
Subtract the actual revenue from the budgeted price to find the sales price variance. In this example, subtract $27,000 from $25,500 to find the sales variance equals -$1,500.
Video of the Day
Brought to you by
- Thinkstock/Comstock/Getty Images