Sales Variances; Year to Year Hathaway Products, Inc., produces an innovative lighting system used in restaurants and high-end retail stores to provide a pleasing, warm atmosphere. Hathaway produces two versions of the product, called Starlight and Moonlight. Sales management at Hathaway wants to complete a sales performance analysis and has collected the following information for 2009 and 2010.
| 2010 | 2009 | ||||
Sales units | 12,000 | 10,000 |
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Sales mix for each product |
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Starlight | 20% | 25% |
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Moonlight | 80% | 75% |
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Price |
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Starlight | $35.00 | $ 35.00 |
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Moonlight | $85.00 | $ 90.00 |
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Variable cost per unit |
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Starlight | $22.00 | $ 22.00 |
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Moonlight | $48.00 | $ 48.00 |
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Fixed cost | $150,000 | $150,000 |
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Required
1. Calculate a flexible budget contribution income statement for 2010, showing the 2010 results, the 2009 results, and the flexible budget. Use Exhibit 16.15 as a guide.
2. Calculate the volume variances for each product based both on sales dollars and contribution margin.
3. Determine the sales volume variance, the sales mix variance, and the sales quantity variance for each product, based on contribution margin.
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