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Q ? Compute the total sales-volume variance, the t...

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Q ? Compute the total sales-volume variance, the total sales-mix variance, and the total sales-quantity variance. (Calculate all variances in terms of contribution margin.) Show results for each product in your computations. A - Sales-volume variance = Actual quantity of units sold - Budgeted quantity of units sold x Budgeted contribution margin per unit Kola = 480,000 - 400,000 x $2.00 = 80,000 x $2.00 = $160,000 favorable Limor = 900,000 - 600,000 x $1.20 = 300,000 x $1.20 = $360,000 favorable Orlem = 1,620,000 - 1,500,000 x $2.50 = 120,000 x $2.50 = $300,000 favorable Total $820,000 favorable Sales-quantity variance = Actual units of all products sold - Budgeted units of all products sold x Budgeted sales-mix percentage x Budgeted contribution margin per unit Kola = 3,000,000 - 2,500,000 x 0.16 x $2.00 = 500,000 x 0.16 x $2.00 = $160,000 favorable Limor = 3,000,000 - 2,500,000 x 0.24 x $1.20 = 500,000 x 0.24 x $1.20 = $144,000 favorable Orlem = 3,000,000 - 2,500,000 x 0.60 x $2.50 = 500,000 x 0.60 x $2.50 = $750,000 favorable Total $1,054,000 favorable Sales-mix variance = Actual units of all products sold x Actual sales-mix % - Budgeted sales-mix percentage x Budgeted contribution margin per unit Kola = 3,000,000 x 16% - 16% x $2.00 = 3,000,000 x 0.00 x $2.00 = $0 favorable Limor = 3,000,000 x 30% - 24% x $1.20 = 3,000,000 x 0.06 x $1.20 = $216,000 favorable Orlem = 3,000,000 x 54% - 60% x $2.50 = 3,000,000 x -0.06 x $2.50 = $450,000 unfavorable Total $234,000 unfavorable Instructor?s Q - What inferences can you draw from the variances computed in requirement 1? Criteria ? If answer is outside of our textbook, please provide your source or reference, if within, provide the page or pages. Reference - Horngren, C. T., Datar, S.M., Foster, G., Rajan, M., & Ittner, C. (2009). Cost Accounting: A Managerial Emphasis (13th ed.). Upper Saddle River, NJ: Pearson Prentice Hall, pp 517-519.

 

Paper#9714 | Written in 18-Jul-2015

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