Sales-mix and sales-quantity variances. Lofty Bread Ltd is a baking company that operates in Thailand. The company produces two types of bread—a full loaf and a mini loaf. A full loaf is 8 inches long and a mini loaf is 3 inches long. Each full loaf is sold for ฿50 and each mini loaf is sold for ฿30. Lofty’s budget and actual figures for the last year were as follows: Budget Actual Number of valets: Full loafs 3,600 4,000 Mini loafs 2,000 3,980 Revenue ฿240,000 ฿319,400 Variable costs: Wages ฿114,000 ฿122,000 Baking materials ฿ 6,200 ฿ 12,400 Utilities ฿ 6,520 ฿ 9,200 ฿126,720 ฿143,600 Contribution ฿113,280 ฿175,800 Fixed costs: Rent and rates ฿ 36,800 ฿ 36,800 Operating income ฿ 76,480 ฿139,000 Note: The currency of Thailand is the Thai Baht and the currency symbol is ฿. The budgeted contribution to sales ratios for the two types of valet are 44.6% for full loafs and 55% for mini loafs. Using the data provided for full valets and mini loafs, compute: Required 1.The total sales-mix contribution variance. 2.The total sales-quantity contribution variance. 3.Briefly differentiate between sales-mix and sales-quantity variances.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Sales-mix and sales-quantity variances. Lofty Bread Ltd is a baking company that operates in Thailand. The company produces two types of bread—a full loaf and a mini loaf. A full loaf is 8 inches long and a mini loaf is 3 inches long. Each full loaf is sold for ฿50 and each mini loaf is sold for ฿30. Lofty’s budget and actual figures for the last year were as follows:
Budget Actual
Number of valets:
Full loafs 3,600 4,000
Mini loafs 2,000 3,980
Revenue ฿240,000 ฿319,400
Variable costs:
Wages ฿114,000 ฿122,000
Baking materials ฿ 6,200 ฿ 12,400
Utilities ฿ 6,520 ฿ 9,200
฿126,720 ฿143,600
Contribution ฿113,280 ฿175,800
Fixed costs:
Rent and rates ฿ 36,800 ฿ 36,800
Operating income ฿ 76,480 ฿139,000
Note: The currency of Thailand is the Thai Baht and the currency symbol is ฿.
The budgeted contribution to sales ratios for the two types of valet are 44.6% for full loafs and 55% for mini loafs.
Using the data provided for full valets and mini loafs, compute:
Required
1.The total sales-mix contribution variance.
2.The total sales-quantity contribution variance.
3.Briefly differentiate between sales-mix and sales-quantity variances.
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