Question

Problem 17-44 (Algo) Sales Mix and Quantity Variances (LO 17-4)

Lake Cellars produces and sells white wine. The following data concern the three varietals of white wine the company currently offers. Sales data for August are given as follows.

 

	Sauvignon Blanc				Chardonnay				Riesling			Total
Budgeted selling price	$	9.70			$	11.20			$	7.70
Budgeted variable cost	$	7.15			$	8.45			$	6.05
Budgeted selling quantity		19,300				7,300				11,200			37,800
Actual selling price	$	9.90			$	7.30			$	8.30
Actual variable cost	$	6.45			$	8.70			$	6.10
Actual selling quantity		20,900				7,500				11,000			39,400

 

Required:

a. Compute the sales price variance for all three wines. 

b. Compute the activity variance for Lake Cellars for August.

c. Compute the mix and quantity variances for Lake Cellars for August.

Answer 1

part A) SB= (9.90- 9.70)* 20,900= 4,180 F

C= (7.30- 11.20)* 7,500= 29,250 U

R= (8.30- 7.70)* 11,000= 6,600 F

Total 4,180+ 29,250+ 6,600= 18,470 U

part B& C) 9.70- 7.15= 2.55      11.20- 8.45= 2.75       7.70- 6.05= 1.65

flex:

SB 2.55* 20,900= 53,295

C  2.75* 7,500= 20,625

R 1.65* 11,000= 18,250

total:53,295+ 20,625+ 18,250= 92,070

middle:

SB 2.55* 39,400* 19,300/ 37,800= 51,298.174603175

C 2.75* 39,400* 7,300/ 37,800= 20,924.735449735

R 1.65* 39,400* 39,400/ 37,800= 19,262.222222222

total 91,485.13225291

planned: 

SB  2.55* 19,300= 49,215

C  2.75* 7,300= 20,075

R  1.65* 11,200= 18,480

total 49,215+ 20,075+ 18,480= 87,770

C) Mix variance= 92,070- 91,485= 585 F

     quantity variance= 91,485- 87,770= 3,715 F

B) activity variance= 92,070- 87,770= 4,300 F

Answer 2

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