Question

# Pricing Strategy, Sales Variances Eastman, Inc., manufactures and sells three products: R, S, and T. In...

Pricing Strategy, Sales Variances

Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following.

 Budgeted Budgeted Volume Price Product R 114,900 \$28 Product S 148,400 20 Product T 22,700 20

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.

Required:

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 Product R \$ Unfavorable \$ Favorable Product S \$ Unfavorable \$ Favorable Product T \$ Unfavorable \$ Favorable

 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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