Kevin works in the accounting department of a local footwear manufacturer that specializes in clogs and boots. Clogs and boots. typically sell for $105 and $193 per pair, respectively. Based on past experience, fashion trends, and seasonal shifts, the company expected to sell 770 pairs of clogs and 230 pairs of boots. The variable cost per pair was $48 for clogs and $83 for boots. At the end of the year, Kevin evaluated the company's sales and contribution margin amounts against the budget. Actual results for the year were as follows. ● . . (2) Actual sales volume: clogs, 946; boots, 154. Actual selling price: clogs, $114 per pair; boots, $184 per pair. Actual per unit variable costs for each product were the same as budgeted.
Kevin works in the accounting department of a local footwear manufacturer that specializes in clogs and boots. Clogs and boots. typically sell for $105 and $193 per pair, respectively. Based on past experience, fashion trends, and seasonal shifts, the company expected to sell 770 pairs of clogs and 230 pairs of boots. The variable cost per pair was $48 for clogs and $83 for boots. At the end of the year, Kevin evaluated the company's sales and contribution margin amounts against the budget. Actual results for the year were as follows. ● . . (2) Actual sales volume: clogs, 946; boots, 154. Actual selling price: clogs, $114 per pair; boots, $184 per pair. Actual per unit variable costs for each product were the same as budgeted.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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Transcribed Image Text:(c)
Break down the company's comprehensive sales activity variance into the sales mix variance and sales quantity variance,
specifying the amount and sign for each.
Sales mix variance
Sales quantity variance
$
The
$
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Which of these two variances had a bigger effect on the comprehensive sales activity variance this year?
had a greater effect on the sales activity variance
Transcribed Image Text:Kevin works in the accounting department of a local footwear manufacturer that specializes in clogs and boots. Clogs and boots
typically sell for $105 and $193 per pair, respectively. Based on past experience, fashion trends, and seasonal shifts, the company
expected to sell 770 pairs of clogs and 230 pairs of boots. The variable cost per pair was $48 for clogs and $83 for boots.
At the end of the year, Kevin evaluated the company's sales and contribution margin amounts against the budget. Actual results for
the year were as follows.
.
●
●
Gal
Actual sales volume: clogs, 946; boots, 154.
Actual selling price: clogs, $114 per pair; boots, $184 per pair.
Actual per-unit variable costs for each product were the same as budgeted.
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