Which statement best defines sales price variance?

Which statement best defines sales price variance?

• A. Difference between actual revenue and revenue that should have been achieved at the standard price for actual units
• B. Difference between budgeted revenue and actual revenue
• C. Difference between actual units sold and budgeted units sold
• D. Difference between actual revenue and budgeted revenue

Answer: (D)

Sales price variance measures how revenue changes because the price per unit achieved differs from the standard price, using the actual quantity sold. It shows the impact of pricing on revenue, holding the actual sales volume constant. The essential idea is: SPV = (Actual price per unit − Standard price per unit) × Actual units sold. This aligns with the statement that compares actual revenue to the revenue that would have been earned if each of the actual units had been sold at the standard price. That difference isolates the effect of price changes on revenue. Other descriptions refer to the overall revenue variance (actual vs budgeted revenue) or to the volume variance (difference between actual and budgeted units sold), which mix price and volume effects or focus on quantity rather than price per unit.

Sales price variance measures how revenue changes because the price per unit achieved differs from the standard price, using the actual quantity sold. It shows the impact of pricing on revenue, holding the actual sales volume constant. The essential idea is: SPV = (Actual price per unit − Standard price per unit) × Actual units sold.

This aligns with the statement that compares actual revenue to the revenue that would have been earned if each of the actual units had been sold at the standard price. That difference isolates the effect of price changes on revenue.

Other descriptions refer to the overall revenue variance (actual vs budgeted revenue) or to the volume variance (difference between actual and budgeted units sold), which mix price and volume effects or focus on quantity rather than price per unit.