The Chair Company manufactures two modular types of chairs; one for the residential market, and the other for the office market. Budgeted and actual operating data for the past year are: Static Budget Actual Results Home 260,000 Office 140,000 Home 248,400 Office 165,600 Number of chairs sold Contribution margin $26,000,000 $11,200,000 $22,356,000 $13,248,000 The industry volume for residential and office chairs of the type sold by the Chair company had been estimated at 2,400,000. Actual industry volume for the year was 2,200,000 chairs. Required: (make sure to label each answer and show your work) a. Compute the sale-mix variance for the office chair. b. Compute the sales- quantity variance for the Home chair.
The Chair Company manufactures two modular types of chairs; one for the residential market, and the other for the office market. Budgeted and actual operating data for the past year are: Static Budget Actual Results Home 260,000 Office 140,000 Home 248,400 Office 165,600 Number of chairs sold Contribution margin $26,000,000 $11,200,000 $22,356,000 $13,248,000 The industry volume for residential and office chairs of the type sold by the Chair company had been estimated at 2,400,000. Actual industry volume for the year was 2,200,000 chairs. Required: (make sure to label each answer and show your work) a. Compute the sale-mix variance for the office chair. b. Compute the sales- quantity variance for the Home chair.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:The Chair Company manufactures two modular types of chairs; one for the residential market, and the other for the office market. Budgeted and actual operating data for the past year are:
Actual Results
Home
260,000
Static Budget
Office
140,000
Number of chairs sold
Contribution margin $26,000,000 $11,200,000 $22,356,000 $13,248,000
Home
248,400
Office
165,600
The industry volume for residential and office chairs of the type sold by the Chair company had been estimated at 2,400,000. Actual industry volume for the year was 2,200,000 chairs.
Required: (make sure to label each answer and show your work)
a. Compute the sale-mix variance for the office chair.
b. Compute the sales- quantity variance for the Home chair.
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