Business Glossary

difference between the actual number of units sold and the budgeted number, multiplied by the budgeted selling price per unit; also called sales quantity variance.

If the actual sales are greater than the budgeted sales, a variance is favorable; otherwise, it is unfavorable. For example, ABC Shops sold 50,000 units of product A for $21 each, in comparison with the budgeted 60,000 units at $22. The sales volume variance is (60,000 - 50,000) x $22 = $220,000. Since the actual sales were lower than the budgeted sales, the sales volume variance is unfavorable.