Question

Robinson Company has two products, A and B. Robinson's budget for August follows: Sales Variable cost Contribution margin Fixed cost Operating income Selling price Master Budget Product A Product B $264,000 $396,000 154,000 264,000 $110,000 $ 132,000 88,000 66,000 $ 22,000 $ 66,000 $ 120 $ 60 On September 1, these operating results for August were reported: Sales Variable cost Contribution margin Fixed cost Operating income Units sold Operating Results Product A Product B $198,000 $ 446,400 117,000 309,600 $ 81,000 $ 136,800 88,000 66,000 $ (7,000) $ 70,800 1,800 7,200 Required: 1. For each product, determine the following variances measured in dollars of contribution margin: a. Flexible-budget variance b. Sales volume variance c. Sales quantity variance d. Sales mix variance Product A Unfavorable Unfavorable Favorable Unfavorable Product B Unfavorable Favorable Favorable Favorable

Answer 1

a skrible budget means standard budget hot actual output I from given information sales selling prica la o . Master Budget product't' Product is $264,000 $396,000 3120 $60 $2,200 units No. of Sales unit el b)=(c) 66co units Naziable cast (d) . $ 154000 $264000 Variable cost per unit (/)=(e) $ 70 unit $40/unit Ilenible budget for given to 1800 units for product A and 7200 units for products fixed cost will remain same flenible budget product a product B units sold 1800 7200 ice-(From Master budget) selling price (from Master budget) $120 $60 Sales . $ 216,000 $432,000 lessi variable cost $ 126,000 B- $40*7200 units Contribution margin lex: fined cast (66,0002 Operating Income based on 2000 flexible budget lag Operating Income based on 79, 800 A 70 x 180ounits -$288,000 $144,00 . : 98,000) (88,000) $ 78,00 (7000) Actual Results B ią, flexible budget, variances $ 9000 up $ 7200 uf Scanked with CamScanner

o arises as a result of sales volume variance change in volume sales volume variance = standard - Budgeted sales Sale a actual . Quantity standardy standard selling price per unit Quantitat product a s (1900 - 2200) * 120 = 48000 unfave Be (7200 - 6600) «60 36,000 faw. Budgeted sales Budgeted at price 2200 120 value 264,000 Actual sales aty price value 1800 110. 198000 7206 62 CU6400 B 6600 60 396000 660000 ee 8900 644,400 Revised Standard min Cie, actua) total quantity in budgeted ratio) = 2,250 2200 x 9000 8800 6600 x 9000 B = 6,750 8800 Os Scanned with CamScanner

Rensed standard Quantity . Quantity Sales Quantity variance a i . standard price foodgated - standard price & price x C Revised . Rev - Budgeted A = 120x(2250-2200) B = 6ooo favo S Standard - aly Quanbilen B= 60 x (6750 - 6600) - 9000 for. so, sales Quantity variance A = 6000 favo Bo 9000 favo d sales min Variance a standard ( Actual - Revised, (min - price Standard min. / A B 3 120 (1800 - 2250) = syoooom.cn 60 x (7200 - 6750) – 27,000 fav. = Check Sales volume variance : sales Quantity + sales min variance Variance = 6ooo for + S4ooo un. for 48,000 on. For Zo fav + 27,000 fav 36,00 Fav. B = & Scanned with CamScanner