Intermediate: Calculation of sales margin variances You are required:

(a) to comment on the statement that 'for most managerial purposes the sales margin variances (operating profit variances) are more informative than sales variances'.

(b) using the data given in the table below, to calculate for each product and in total, the operating profit variances:

(i) due to sales;

(ii) due to selling prices;

(iii) due to sales volume.

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Per unit Totals Selling price Cost Profit Quantity Profit Sales () () () (units) () () Budget: A 30 16 14 1500 B 10 9 1 3500 C 20 18 2 2 1000 Actual: A 15 1100 16500 34100 B C Total 1 5200 5200 52000 4 1100 4400 24 200 26100 110300 CIMA Cost Accounting 1 November 1982