Danner Fashions Sells a Line of Women's Dresses The Sales Price Variance for November Is:
A) $30,000 Unfavorable

question 70

Multiple Choice

Danner Fashions sells a line of women's dresses.Danner's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income.
$$\begin{array} { | l | r | r | } \hline & \text { Actual } & \text { Budget } \\\hline \text { Dresses sold } & 5,000 & 6,000 \\\hline \text { Sales } & \$ 235,000 & \$ 300,000 \\\hline \text { Variable costs } & \underline { ( 145,000 ) } & \underline { ( 180,000 ) } \\\hline \text { Contribution margin } & \$ 90,000 & 120,000 \\\hline \text { Fixed Costs } & \underline { ( 84,000 ) } & \underline { ( 80,000 ) } \\\hline \text { Operating inc ome } &\underline { \$ 6,000} & \underline {\$ 40,000} \\\hline\end{array}$$ The sales price variance for November is:

• A) $30,000 unfavorable.
• B) $18,000 unfavorable.
• C) $20,000 unfavorable.
• D) $15,000 unfavorable.

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Definitions:

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the financial success of a business beyond breaking even.

Accounting Costs

The documented expenses and outlays involved in running a business, as recorded in its financial statements.

Economic Costs

The total cost of choosing one action over another, including both explicit costs (direct payments) and implicit costs (opportunity costs).

Price-Taker Market

A market structure where individual firms have no control over the price of their product, taking the market price as given.