Question

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 Selling Price per Actual Operating Results Selling Price per Gallon $2.10 Variable Variable Costs per Gallon $1.45 Costs per Gallon Flavor Gallons Gallon Gallons Vanilla $2.25 $1.55 360,000 450,000 300,000 90,000 300,000 420,000 430,000 210,000 chocolate 3.50 2.60 3.35 2.50 strawberry Anchovy 1.70 1.75 2.80 3.00 3.20 4.50 3.00 5.00 Required: 1. Compute these variances for the individual flavors and total quantity sold. (Do not round intermediate calculations.) b. a. C. Sales Volume Variance Sales Quantity Variance Flavor Sales Mix Variance Vanilla Chocolate Strawberry Anchovy Total

Answer 1

Basic Data
Flavor	Budgeted Profit*	Budgeted Gallons	Actual Gallons	Standard Mix**
Vanilla	$                     0.70	360000	300000	408,000
Chocolate	$                     0.90	450000	420000	510,000
Strawberry	$                     1.10	300,000	430,000	340,000
Anchovy	$                     1.50	90,000	210,000	102,000
Total		1,200,000	1,360,000	1360000

Variances
Flavor	Sales Volume Variance		Sales Mix Variance		Sales Quantity Variance
Vanilla	-60000	$    (42,000.00)	-108000	$    (75,600.00)	48000	$      33,600.00
Chocolate	-30000	$    (27,000.00)	-90000	$    (81,000.00)	60000	$      54,000.00
Strawberry	130000	$    143,000.00	90000	$      99,000.00	40000	$      44,000.00
Anchovy	120000	$    180,000.00	108000	$    162,000.00	12000	$      18,000.00
Total	160000	$          254,000	0	$          104,400	160000	$          149,600

Sales Volume Variance = (Actual Gallons-Budgeted Gallons) x Budgeted Profit

Sales Mix Variance = (Actual Mix - Standard Mix) x Budgeted Profit

Sales Quantity Variance = (Standard Mix - Budgeted Mix) x Budgeted Profit

*Budgeted Profit = Selling Price per unit - Variable Cost per unit

**Standard Mix = Actual Total Quantity sold in Budgeted Mix