Pricing Strategy, Sales Variances
Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following.
At the end of the year, actual sales revenue for Product R and Product S was $3,190,200 and $2,986,800, respectively. The actual price charged for Product R was $26 and for Product S was $19. Only $9 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $418,950 for this product.
1. Calculate the sales price and sales volume variances for each of the three products based on the original budget.
|Sales price variance||Sales volume variance|
2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product?
|Sales price variance|
|Sales volume variance|
|Penetration pricing strategy is being followed which involves charging low prices initially|
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