Sales Variances; Flexible-Budget Variance; Review of Chapter 14 Robinson Company hastwo products, A and B. Robinson’s budget for August follows:Master BudgetProduct A Product BSales $240,000 $300,000Variable cost 140,000 180,000Contribution margin $100,000 $120,000Fixed cost 80,000 40,000Operating income $ 20,000 $ 80,000Selling price $ 120 $ 50On September l, these operating results for August were reported:Operating ResultsProduct A Product BSales $180,400 $341,120Variable cost 106,600 216,480Contribution margin $ 73,800 $124,640Fixed cost 80,000 40,000Operating income $ (6,200) $ 84,640Units sold 1,640 6,560Required1. For each product, determine the following variances measured in dollars of contribution margin:a. Flexible-budget variance.b. Sales volume variance.c. Sales quantity variance.d. Sales mix variance.2. Explain the amount of the flexible-budget variance using the amounts of the selling price and variablecost 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 Variances; Flexible-
two products, A and B. Robinson’s budget for August follows:
Master Budget
Product A Product B
Sales $240,000 $300,000
Variable cost 140,000 180,000
Contribution margin $100,000 $120,000
Fixed cost 80,000 40,000
Operating income $ 20,000 $ 80,000
Selling price $ 120 $ 50
On September l, these operating results for August were reported:
Operating Results
Product A Product B
Sales $180,400 $341,120
Variable cost 106,600 216,480
Contribution margin $ 73,800 $124,640
Fixed cost 80,000 40,000
Operating income $ (6,200) $ 84,640
Units sold 1,640 6,560
Required
1. For each product, determine the following variances measured in dollars of contribution margin:
a. Flexible-budget variance.
b. Sales volume variance.
c. Sales quantity variance.
d. Sales mix variance.
2. Explain the amount of the flexible-budget variance using the amounts of the selling price and variable
cost variances.
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