Question

Hello,

Are you able to assist with the below? And show all work? Thanks.

Exam Company manufactures two modular AV entertainment systems;

one for the residential (home) market, and the other for the commercial (office)

market. Budgeted and Actual operating data for the year 20x1 are:

		Budgeted		Actual
Types of System		Home	Office	Home	Office
Number of Units Sold		24,000	8,000	22,475	6,525
Budget Contribution		$225	$350
Margin (per unit)

Required

i. Calculate the Sales-Volume Variance first.

ii. Calculate the Sales-Mix Variance by type of system, and in total.

iii. Calculate the Sales-Quantity Variance by type of system, and in total.

This is what is given only, there is no other information provided

Answer 1

i)

Sales volume variance = (Actual units sold - Budgeted units sold) x Budgeted price per unit

Home sales volume variance = (22,475 - 24,000) x $225 = $343,125 U

Office sales volume variance = (6,525 - 8,000) x $350 = $516,250 U

Total = $859,375 U

ii)

Sales mix variance = (Actual unit sales – Actual units at budgeted mix) × Budgeted contribution margin

Home sales mix = 24,000 / 32,000 = 0.75

Office sales mix = 8000 / 32,000 = 0.25

Home sales mix variance = (22,475 - 21,750) x $225 = $163,125 F

Office sales mix variance = (6,525 - 7,250) x $350 = $253,750 U

Sales mix variance = $90,625 U

iii)

Sales Quantity variance = (Actual sales at budgeted mix - Budgeted sales) x Budgeted contribution margin

Home sales quantity variance = (21,750 - 24,000) x $225 = $506,250 U

Office sales quantity variance = (7,250 - 8,000) x $350 = $262,500 U

Sales quantity variance = $768,750 U