Question

A-Zone Media sells two models of e-readers. The budgeted price per unit for the wireless model is $196 and the budgeted price per unit for the wireless and cellular model is $424. The master budget called for sales of 10,400 wireless models and 2,700 wireless and cellular models during the current year. Actual results showed sales of 7,900 wireless models, with a price of $220 per unit, and 4,300 wireless and cellular models, with a price of $480 per unit. The standard variable cost per unit is $84 for a wireless model and $180 for a wireless and cellular model.

Required:

a. Compute the activity variance for these data. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Activity Variance

$190,400.00

F

b. Compute the mix and quantity variance for these data. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Mix Variance	$245,520.00	F
Quantity Variance	$135,120.00	U

Answer 1

A-Zone Media a. Compute the activity variance for these data. Activity variance 1934000 1823600 110400 F ha (budgeted) contribution margin per unit Flexible Budget AQ x (SP-SV) 7,900 x ($196-$84)+$4,300 x ($424-$180) $1,934,000 ASQ x (SP-SV) 12,200x (10,400/13,100)x ($196 $84) + 12,200 x (2,700/13,100) x ($424 $180) $1,698,315 Master Budget 10,400 x ($196 $84) 2,700 x ($424 $180) $1,823,600 b. Compute the mix and quantity variance for these data Mix variance ($1,934,000-$1,698,315) Quantity variance ($1,698,315-$1,823,600) $125,285 U Activity variance ($235,686 F-$125,285 U) $110,400F $235,686 F