The volume variance is computed as:

• A. The difference between budgeted costs and actual costs.
• B. The difference between actual sales and actual costs.
• C. The difference between budgeted sales and actual sales, multiplied by the standard contribution margin per unit.
• D. The difference between budgeted sales and actual sales, multiplied by the actual selling price per unit.

Answer: (C)

Verified step by step guidance

1. Understand the concept of volume variance: Volume variance measures the impact of the difference between budgeted sales and actual sales on profitability. It is calculated using the standard contribution margin per unit or the actual selling price per unit.
2. Identify the formula for volume variance: Volume variance = (Budgeted Sales - Actual Sales) × Standard Contribution Margin per Unit.
3. Break down the components: Budgeted Sales refers to the expected number of units sold, Actual Sales refers to the actual number of units sold, and Standard Contribution Margin per Unit is the profit margin expected per unit sold.
4. Determine the values: Locate the budgeted sales, actual sales, and standard contribution margin per unit from the given data or problem statement.
5. Apply the formula: Substitute the values into the formula to compute the volume variance. Ensure that the multiplication is performed correctly to reflect the impact of sales volume changes on profitability.