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. Chunky 2,000 bars $400 Choco-Lite Budget Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Contribution margin Manufacturing fixed cost Product margin Chewy 2,000 bars $200 Total 4,000 bars $600 8,000 bars $1, 200 140 320 460 920 $ 60 $ 80 $140 24 280 40 40 60 140 $ 20 $ 40 $ 80 $4 140 Marketing and administrative costs (all fixed) 50 Operating profit 90 Actual Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Contribution margin Chewy 1,600 bars $162 Chunky 2,000 bars $400 Total 7,800 bars $1,162 Choco-Lite 4,200 bars $600 112 322 464 898 $ 50 $ 78 $136 $ 264

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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)
Chewy
2,000 bars
$200
Chunky
2,000 bars
$400
Choco-Lite
Total
8,000 bars
$1, 200
4,000 bars
$600
Variable costs
140
320
460
920
Contribution margin
Manufacturing fixed cost
$ 60
$ 80
$140
280
40
40
60
140
Product margin
$ 20
$ 40
$ 80
$4
140
Marketing and administrative costs (all fixed)
50
Operating profit
$
90
Actual
Sales-units (in thousands)
Sales-dollars (in thousands)
Variable costs
Chewy
1,600 bars
$162
Total
7,800 bars
$1,162
Chunky
Choco-Lite
2,000 bars
$400
4,200 bars
$600
112
322
464
898
$ 50
$ 78
$ 264
Contribution margin
Manufacturing fixed cost
Product margin
$136
$4
42
44
63
149
$ 8
$ 34
$ 73
$4
$ 115
Marketing and administrative costs (all fixed)
55
Operating profit
$
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 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
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. Budget Sales-units (in thousands) Sales-dollars (in thousands) Chewy 2,000 bars $200 Chunky 2,000 bars $400 Choco-Lite Total 8,000 bars $1, 200 4,000 bars $600 Variable costs 140 320 460 920 Contribution margin Manufacturing fixed cost $ 60 $ 80 $140 280 40 40 60 140 Product margin $ 20 $ 40 $ 80 $4 140 Marketing and administrative costs (all fixed) 50 Operating profit $ 90 Actual Sales-units (in thousands) Sales-dollars (in thousands) Variable costs Chewy 1,600 bars $162 Total 7,800 bars $1,162 Chunky Choco-Lite 2,000 bars $400 4,200 bars $600 112 322 464 898 $ 50 $ 78 $ 264 Contribution margin Manufacturing fixed cost Product margin $136 $4 42 44 63 149 $ 8 $ 34 $ 73 $4 $ 115 Marketing and administrative costs (all fixed) 55 Operating profit $ 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 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
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