Volume variance is the difference between which two quantities, valued at standard contribution per unit?

Volume variance is the difference between which two quantities, valued at standard contribution per unit?

• A. The difference between actual and expected sales levels
• B. The difference between actual and budgeted production levels
• C. The difference between budgeted sales volume and actual sales volume, valued at the standard contribution per unit
• D. The difference between actual revenue and budgeted revenue due to price changes

Answer: (B)

Volume variance focuses on production activity: how far actual output differs from what was budgeted, and it translates that difference into profit impact using the standard contribution per unit. In practice, you calculate it as (actual production − budgeted production) × standard contribution per unit. If you produced more than planned, the variance is favorable because more units contribute at the standard rate; if you produced less, it’s unfavorable. This matches the idea of comparing actual production to budgeted production and valuing that difference at the standard contribution per unit. It’s not about sales levels or price changes affecting revenue, which is why the other options don’t describe volume variance.

Volume variance focuses on production activity: how far actual output differs from what was budgeted, and it translates that difference into profit impact using the standard contribution per unit. In practice, you calculate it as (actual production − budgeted production) × standard contribution per unit. If you produced more than planned, the variance is favorable because more units contribute at the standard rate; if you produced less, it’s unfavorable. This matches the idea of comparing actual production to budgeted production and valuing that difference at the standard contribution per unit. It’s not about sales levels or price changes affecting revenue, which is why the other options don’t describe volume variance.