Starting with Table 23.3, prepare Talca Fruta’s sales budget and variance report for 2010. Assume that Talca Fruta plans that its 2010 results (prices in A and volume) in Europe will mirror those actually achieved in 2009. However, the company is again wrong. The economic weakness in much of Europe means that fruit from within the EU becomes cheaper and more abundant and demand falls.The company eventually sells 900,000 kilos of fruit priced at € 0.8/KG but the CLP weakens further and, on average, the € is now worth 850 CLP.

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Table 23.3 Analyzing variances in the sales budget of Talca Fruta in 2009 Basic data Talca Fruta Value ABCDEFG Calculations Results Result CLP Exchange rate used budget CLP/ A CLP 714 Exchange rate end of budget yr CLP/ Average exchange rate (CLP/E) B CLP 804 C CLP 759 Budgeted sales price per kilo in Euro D 1.10 Budgeted volume (kilos) Sales budget () E 1,000,000 F DXE 1,100,000 Sales budget (CLP) Results Actual sales (kilos) G DX EXA CLP 785,400,000 Actual sales price H 1,150,000 1 0.95 H 1 What happened in Europe Actual sales in Europe () J HxI 1,092,500 ] Actual sales (units) x budgeted (std) price K HxD 1,265,000 K Sales price variance (bracket is unfavourable) L J-K (172,500) L Sales volume variance (bracket is unfavourable) M K-F 165,000 M Effect of changes in the value of the currencies Actual sales CLP at average exchange rate CLP/ N Hxlx C Actual sales (units) x actual price () x budgeted (std) exchange rate HxIxA Exchange rate variance (bracket is unfavourable) Q N-O CLP 829,149,051 N CLP 780,045,000 CLP 49,104,051 Q You can also compute these variances thus Actual sales (units) x budgeted (std) price x std exchange rate HxDxA CLP 903,210,000 P CLP Sales price variance (bracket is unfavourable) R O-P (CLP 122,165,000) R CLP Sales volume variance = (Actual sales (units) x budgeted (std) price x std exchange rate)- Sales budget (R) S P-G CLP 117,810,000 S Exchange rate variance (bracket is unfavourable) N-O CLP 49,104,051