Earle Soup Company makes three varieties of soups: Bean, Tomato, and Vegetable. Sales volume for the annual budget is determined by estimating the total market volume for soups and then applying the company's prior year market share, adjusted for planned changes due to company programs for the coming year. Volume is apportioned among the three varieties of soup based on the prior year's product mix, again adjusted for planned changes for the coming year. The following are the company budget and the results of operations for the most recent quarter. Budget (all units and costs in thousands) Sales-units Sales-dollars Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Actual (all units and costs in thousands) Sales-units Sales-dollars Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Bean 30 cases $ 1,200 840 $ 360 240 24 $ 120 Tomato 30 cases $ 2,400 1,920 $ 480 240 $ 240 cases Vegetable 60 cases $ 3,600 2,760 $ 840 360 $ 480 Total 120 $ 7,200 cases 5,520 $ 1,680 840 $ 840 300 $ 540 Bean cases Tomato 30 $ 2,400 1,932 $ 468 264 $ 48 $ 204 Vegetable 63 $ 3,600 2,784 $ 816 378 $ 438 cases Total 117 $ 6,972 5,388 $ 1,584 894 $ 690 cases $ 972 672 $ 300 252 330 Industry volume for the quarter was estimated at 1.2 million cases for budgeting purposes. Actual industry volume for the quarter was 1,140,000 cases. Required: Break down the total activity variance into sales mix and quantity parts. Note: Do not round intermediate calculations. Enter your answers in thousands. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Sales mix variance Quantity variance $ 360
Earle Soup Company makes three varieties of soups: Bean, Tomato, and Vegetable. Sales volume for the annual budget is determined by estimating the total market volume for soups and then applying the company's prior year market share, adjusted for planned changes due to company programs for the coming year. Volume is apportioned among the three varieties of soup based on the prior year's product mix, again adjusted for planned changes for the coming year. The following are the company budget and the results of operations for the most recent quarter. Budget (all units and costs in thousands) Sales-units Sales-dollars Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Actual (all units and costs in thousands) Sales-units Sales-dollars Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Bean 30 cases $ 1,200 840 $ 360 240 24 $ 120 Tomato 30 cases $ 2,400 1,920 $ 480 240 $ 240 cases Vegetable 60 cases $ 3,600 2,760 $ 840 360 $ 480 Total 120 $ 7,200 cases 5,520 $ 1,680 840 $ 840 300 $ 540 Bean cases Tomato 30 $ 2,400 1,932 $ 468 264 $ 48 $ 204 Vegetable 63 $ 3,600 2,784 $ 816 378 $ 438 cases Total 117 $ 6,972 5,388 $ 1,584 894 $ 690 cases $ 972 672 $ 300 252 330 Industry volume for the quarter was estimated at 1.2 million cases for budgeting purposes. Actual industry volume for the quarter was 1,140,000 cases. Required: Break down the total activity variance into sales mix and quantity parts. Note: Do not round intermediate calculations. Enter your answers in thousands. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Sales mix variance Quantity variance $ 360
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Munabhai
Transcribed Image Text:Earle Soup Company makes three varieties of soups: Bean, Tomato, and Vegetable. Sales volume for the annual budget is determined
by estimating the total market volume for soups and then applying the company's prior year market share, adjusted for planned
changes due to company programs for the coming year. Volume is apportioned among the three varieties of soup based on the prior
year's product mix, again adjusted for planned changes for the coming year.
The following are the company budget and the results of operations for the most recent quarter.
Budget (all units and costs in thousands)
Sales-units
Sales-dollars
Variable costs
Contribution margin
Manufacturing fixed cost
Product margin
Marketing and administrative costs (all fixed)
Operating profit
Actual (all units and costs in thousands)
Bean
30
cases
$ 1,200
840
$ 360
240
$ 120
Tomato
30
cases
$ 2,400
1,920
$ 480
240
$ 240
Vegetable
60 cases
$ 3,600
2,760
$ 840
360
$ 480
Total
120
cases
$ 7,200
5,520
$ 1,680
840
$ 840
300
$ 540
Sales-units
Sales-dollars
Variable costs
Contribution margin
Manufacturing fixed cost
Product margin
Marketing and administrative costs (all fixed)
Operating profit
24
$ 972
672
$ 300
Bean
cases
cases
Tomato
30
$ 2,400
1,932
$ 468
264
Vegetable
63
$ 3,600
2,784
$ 816
378
252
$ 48
$ 204
$ 438
cases
Total
117
$ 6,972
5,388
$ 1,584
894
Industry volume for the quarter was estimated at 1.2 million cases for budgeting purposes. Actual industry volume for the quarter was
1,140,000 cases.
Required:
Break down the total activity variance into sales mix and quantity parts.
Note: Do not round intermediate calculations. Enter your answers in thousands. Indicate the effect of each variance by selecting
"F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.
Sales mix variance
Quantity variance
$ 690
330
$ 360
cases
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education