Budget for 2017 Actual for 2017 Selling Variable Cost Selling Price Variable Cost Cartons Cartons per Carton $7.20 per Carton Product Sold Price Sold Kostor $12.00 $12.50 $8.00 130,000 132,000 Limba $15.00 $8.25 $16.00 $7.75 108,000 120,000 1. 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. 2. What inferences can you draw from the variances computed in requirement 1? Required

Budget for 2017 Actual for 2017 Selling Variable Cost Selling Price Variable Cost Cartons Cartons per Carton $7.20 per Carton Product Sold Price Sold Kostor $12.00 $12.50 $8.00 130,000 132,000 Limba $15.00 $8.25 $16.00 $7.75 108,000 120,000 1. 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. 2. What inferences can you draw from the variances computed in requirement 1? Required

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Flexible-budget variances, review of Chapters 7 and 8. Eric Williams is a cost accountant and business analyst for Diamond Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct manufacturing labor. Williams feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2017, DDC budgeted annual production of 420,000 doorknobs and adopted the following standards for each doorknob:
A 100-room hotel budgeted an occupancy of 75% and an average room rate of $100 per room for year 2020. Actual occupancy was 50% and average room rate was $90. Assume 365 days in a year. Find the variance in total room revenue, variance in rooms sold and variance in average room rate, and then use the variance analysis matrix to find the constituents in total rooms revenue variance by breaking it up into price variance and quantity variance.
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Compute the sales-quantity and sales-mix variances for each type of ticket and in total in 2017
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