A company produces and sells a range of MP3 players.  Budgeted annual demand, together with budgeted prices and costs for 2021, which comprised 12 equal months, are:

Model:	Annual demand	Budgeted selling price	Standard cost
	units	£/unit	£/unit
De-luxe MP3 player	36,000	100	80
Standard MP3 player	120,000	75	60
Basic MP3 player	60,000	55	45

The following financial results were achieved for the month of April 2021:

Model:	Actual sales	Actual revenue
	units	£000
De-luxe MP3 player	2,000	186
Standard MP3 player	12,500	875
Basic MP3 player	5,100	306

The company uses a standard product costing system but, in the event, no cost variances arose and therefore cost is not an issue in this case.

With the benefit of hindsight, it was realised that the budgeted sales price for De-luxe MP3 player of £100 was hopelessly optimistic, and a price of £90 per unit would have been much more realistic.Calculate the planning and operational price variances.

Answer rating: 100% (QA)

Planning variance is the difference of original budgeted sales price and revised sales price and ope... View the full answer