Lee Lighting produces two models of floor lamps: Standard and Smart. The two differ primarily in the quality of the materials and the additional electronics required for the Smart lamp. At budget, Standard sells for $20 per unit and has a variable cost to produce of $13. The Smart lamp sells for a budgeted $68 per lamp and has a budgeted variable cost to produce of $50. Lee expects to sell 40 percent Smart lamps, and budgeted sales at a total of 98,180 lamps of both models for May. Lee actually sold 94,180 lamps, of which 39,680 were Smart lamps. Smart lamp actual revenues represented 40 percent of May total actual revenue. Required: a. Compute the sales activity variance for Lee for May. h Compute the sales mix and sales quantity variances for May
Lee Lighting produces two models of floor lamps: Standard and Smart. The two differ primarily in the quality of the materials and the additional electronics required for the Smart lamp. At budget, Standard sells for $20 per unit and has a variable cost to produce of $13. The Smart lamp sells for a budgeted $68 per lamp and has a budgeted variable cost to produce of $50. Lee expects to sell 40 percent Smart lamps, and budgeted sales at a total of 98,180 lamps of both models for May. Lee actually sold 94,180 lamps, of which 39,680 were Smart lamps. Smart lamp actual revenues represented 40 percent of May total actual revenue. Required: a. Compute the sales activity variance for Lee for May. h Compute the sales mix and sales quantity variances for May
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.
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Transcribed Image Text:Lee Lighting produces two models of floor lamps: Standard and Smart. The two differ
primarily in the quality of the materials and the additional electronics required for the Smart
lamp. At budget, Standard sells for $20 per unit and has a variable cost to produce of $13.
The Smart lamp sells for a budgeted $68 per lamp and has a budgeted variable cost to
produce of $50. Lee expects to sell 40 percent Smart lamps, and budgeted sales at a total of
98,180 lamps of both models for May. Lee actually sold 94,180 lamps, of which 39,680 were
Smart lamps. Smart lamp actual revenues represented 40 percent of May total actual
revenue.
Required:
a. Compute the sales activity variance for Lee for May.
b. Compute the sales mix and sales quantity variances for May.
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