Sales Volume, Sales Quantity, and Sales Mix Variances Margot’s Ice Cream operates several stores in a major metropolitan city and its suburbs. Its budget and operating data for the currentyear follow:Budgeted Data Actual Operating ResultsFlavor GallonsSellingPrice perGallonVariableCosts perGallon GallonsSellingPrice perGallonVariableCosts perGallonVanilla 240,000 $1.25 $0.55 180,000 $1.10 $0.45Chocolate 300,000 1.50 0.60 270,000 1.35 0.50Strawberry 200,000 1.80 0.70 330,000 2.00 0.75Anchovy 60,000 2.50 1.00 180,000 3.00 1.20Required Round all calculations to 4 decimal places after the decimal point.1. Compute these variances for the individual flavors and total quantity sold:a. Sales volume.b. Sales mix.c. Sales quantity.2. Assess sales in the current year based on your analyses
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 Volume, Sales Quantity, and Sales Mix Variances Margot’s Ice Cream operates several stores in a major metropolitan city and its suburbs. Its budget and operating data for the current
year follow:
Budgeted Data Actual Operating Results
Flavor Gallons
Selling
Price per
Gallon
Variable
Costs per
Gallon Gallons
Selling
Price per
Gallon
Variable
Costs per
Gallon
Vanilla 240,000 $1.25 $0.55 180,000 $1.10 $0.45
Chocolate 300,000 1.50 0.60 270,000 1.35 0.50
Strawberry 200,000 1.80 0.70 330,000 2.00 0.75
Anchovy 60,000 2.50 1.00 180,000 3.00 1.20
Required Round all calculations to 4 decimal places after the decimal point.
1. Compute these variances for the individual flavors and total quantity sold:
a. Sales volume.
b. Sales mix.
c. Sales quantity.
2. Assess sales in the current year based on your analyses
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