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 $3,159,000 and $3,081,800, respectively. The actual price charged for Product R was $27 and for Product S was $19. Only $10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $599,500 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|
|Sales Price Variance||Sales Volume Variance|
|Product R||117000 UF||58800 F|
|Product S||162200 UF||276000 F|
|Product T||599500 UF||37250 F|
Detail working for your easy understanding
|Sales Price Variance= (Actual price-Budgeted Price) X Actual Quantity Sold|
|Product R= (27-28)X 117000=$117000 UF|
|Actual Quantity Sold= 3159000/27=117000 Unit|
|Product S= (19-20)X 162200 =$162200 UF|
|Actual Quantity Sold= 3081800/19=162200 Unit|
|Product T= (10-20)X 59950 =$599500 UF|
|Actual Quantity Sold= 599500/10=59950 Unit|
|Sales Volume Variance=( Actual Sales Quantity- Budgeted Sales Quantity)X Budgeted Price|
|Product R= ( 117000-114900) X 28=$58800 F|
|Product S= ( 162200-148400)X20=$276000 F|
|Product R= ( 59950-22700)X20=$37250 F|
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