Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the annual budget is determined by estimating the total market volume for candy bars 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 bars 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 July. Budget Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Actual Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Chewy 2,000 bars $200 140 $ 60 40 $ 20 Sales mix variance Quantity variance Chewy 1,600 bars $162 112 $ 50 42 $8 Chunky 2,000 bars $400 320 $ 80 40 $ 40 Chunky 2,000 bars $400 322 $78 44 $ 34 Choco-Lite 4,000 bars $600 460 $140 60 $ 80 Choco-Lite 4,200 bars $600 464 $136 63 $ 73 Total 8,000 bars $1,200 920 $ 280 140 $ 140 $ 50 90 Total 7,800 bars $1,162 898 $ 264 149 $ 115 $ 55 60 Industry volume was estimated at 80 million bars for budgeting purposes. Actual Industry volume for July was 76 million ba Required: Break down the total activity variance into sales mix and quantity parts. (Do not round Intermediate calculations. Enter yo answers in thousands. Indicate the effect of each varlance by selecting "F" for favorable, or "U" for unfavorable. If ther is no effect, do not select either option.)
Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the annual budget is determined by estimating the total market volume for candy bars 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 bars 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 July. Budget Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Actual Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Contribution margin Manufacturing fixed cost Product margin Marketing and administrative costs (all fixed) Operating profit Chewy 2,000 bars $200 140 $ 60 40 $ 20 Sales mix variance Quantity variance Chewy 1,600 bars $162 112 $ 50 42 $8 Chunky 2,000 bars $400 320 $ 80 40 $ 40 Chunky 2,000 bars $400 322 $78 44 $ 34 Choco-Lite 4,000 bars $600 460 $140 60 $ 80 Choco-Lite 4,200 bars $600 464 $136 63 $ 73 Total 8,000 bars $1,200 920 $ 280 140 $ 140 $ 50 90 Total 7,800 bars $1,162 898 $ 264 149 $ 115 $ 55 60 Industry volume was estimated at 80 million bars for budgeting purposes. Actual Industry volume for July was 76 million ba Required: Break down the total activity variance into sales mix and quantity parts. (Do not round Intermediate calculations. Enter yo answers in thousands. Indicate the effect of each varlance by selecting "F" for favorable, or "U" for unfavorable. If ther is no effect, do not select either option.)
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:Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the
annual budget is determined by estimating the total market volume for candy bars 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 bars 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 July.
Chewy
2,000 bars
$200
140
$ 60
40
$ 20
Budget
Sales-units (in thousands)
Sales-dollars (in thousands)
Variable costs
Contribution margin
Manufacturing fixed cost
Product margin
Marketing and administrative costs (all fixed)
Operating profit
Actual
Sales-units (in thousands)
Sales-dollars (in thousands)
Variable costs
Contribution margin
Manufacturing fixed cost
Product margin
Marketing and administrative costs (all fixed)
Operating profit
Chewy
1,600 bars
$162
112
Sales mix variance
Quantity variance
$50
42
Chunky
2,000 bars
$400
320
$ 80
40
$ 40
Chunky
2,000 bars
$400
322
$78
44
$34
Choco-Lite
4,000 bars
$600
460
$140
60
$80
Choco-Lite
4,200 bars
$600
464
$136
63
$ 73
Total
8,000 bars
$1,200
920
280
140
140
$
$
$
Total
7,800 bars
$1,162
898
264
149
$ 115
55
$
50
90
$
60
Industry volume was estimated at 80 million bars for budgeting purposes. Actual Industry volume for July was 76 million bars.
Required:
Break down the total activity variance into sales mix and quantity parts. (Do not round Intermediate calculations. Enter your
answers in thousands. Indicate the effect of each varlance by selecting "F" for favorable, or "U" for unfavorable. If there
is no effect, do not select either option.)
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