Pricing Strategy, Sales Variances Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following. Budgeted Budgeted Volume Price Product R 115,200 142,800 Product T 19,700 At the end of the year, actual sales revenue for Product R and Product S was $2,848,800 and $3,440,800, respectively. The actual price charged for Product R was $24 and for Product 5 was $22. Only $10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $524,500 for this product. Required: Product S $25 23 20 1. Calculate the sales price and sales volume variances for each of the three products based on the original budget. Sales price variance Sales volume variance Product R Product S Product T Unfavorable Unfavorable Unfavorable Favorable Favorable Favorable 2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product? Penetration pricing strategy
Pricing Strategy, Sales Variances Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following. Budgeted Budgeted Volume Price Product R 115,200 142,800 Product T 19,700 At the end of the year, actual sales revenue for Product R and Product S was $2,848,800 and $3,440,800, respectively. The actual price charged for Product R was $24 and for Product 5 was $22. Only $10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $524,500 for this product. Required: Product S $25 23 20 1. Calculate the sales price and sales volume variances for each of the three products based on the original budget. Sales price variance Sales volume variance Product R Product S Product T Unfavorable Unfavorable Unfavorable Favorable Favorable Favorable 2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product? Penetration pricing strategy
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Pricing Strategy, Sales Variances
Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following.
Budgeted
Volume
Product R
115,200
Product S
142,800
Product T
19,700
At the end of the year, actual sales revenue for Product R and Product S was $2,848,800 and $3,440,800, respectively. The actual price charged for Product R was $24
and for Product 5 was $22. Only $10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $524,500 for this product.
Required:
Product R
Budgeted
Price
Product S
Product T
1. Calculate the sales price and sales volume variances for each of the three products based on the original budget.
Sales price variance
Sales volume variance
$
$25
23
20
Unfavorable
Unfavorable
Unfavorable
Favorable
Favorable
Favorable
2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product?
Penetration pricing strategy
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