Peterson, Inc., manufactures and sells three products: A, B, and C. In January, Peterson, Inc., budgeted sales of the following.

At the end of the year, actual sales for Product A and Product B were $4,580,000 and $2,415,000 respectively. The actual price charged for each was equal to the budgeted price.
Product C, however, had revenues of $500,000. While total revenue was higher than ex¬
pected, the actual price of $10 represented a last-minute revision from budget to increase consumer acceptance of the product.
Required:
1. Calculate the sales price variance and price volume variance for each of the three prod¬
ucts based on the original budget.
2. Suppose that Product C is a new product just introduced during the year. What pric¬
ing strategy is Peterson, Inc., following for this product?

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Budgeted Volume Budgeted Price Product A 120,000 $40 Product B Product C 150,000 15 20,000 20