14-27 Variance analysis, multiple products. Emcee Inc. manufactures and sells two fruit drinks: Kostor

and Limba. Budgeted and actual results for 2017 are as follows:

Product

Budget for 2017 Actual for 2017

Selling

Price

Variable Cost

per Carton

Cartons

Sold

Selling

Price

Variable Cost

per Carton

Cartons

Sold

Kostor

Limba

$12.00

$15.00

$7.20

$8.25

130,000

120,000

$12.50

$16.00

$8.00

$7.75

132,000

108,000

1. Compute the total sales-volume variance, the total sales-mix variance, and the total sales-quantity

variance. (Calculate all variances in terms of contribution margin.) Show results for each product in

your computations.

2. What inferences can you draw from the variances computed in requirement 1?

Required

Required

Required

594 CHAPTER 14 COS I ALLOCATION, CUSTOMER-PROFITABILITY ANALYSIS, AND SALES-VARIANCE ANALYSIS

Required

MyAccountingLab Problems

14-29 Purposes of cost allocation. Mary Martin recently started a job as an administrative assistant in the

cost accounting department of Needham Manufacturing. New to the area of cost accounting, Mary is puzzled

by the fact that one of Needham's manufactured products, SR670, has a different cost depending on who asks

for it. When the marketing department requested the cost of SR670 in order to determine pricing for the new

catalog, Mary was told to report one amount but when a request came in the very next day from the financialreporting department for the cost of SR670, she was told to report a very different cost Mary runs a report

using Needham's cost accounting system, which produces the following cost elements for one unit of SR670:

Direct materials $114.00

Direct manufacturing labor 65.40

Variable manufacturing overhead 35.04

Allocated fixed manufacturing overhead 131.36

Research and development costs specific to SR670a 24.80

Marketing costs' 23.80

Sales commissions' 45.60

Allocated administrative costs of corporate headquarters 74.40

Customer service costs' 12.20

Distribution costs' 35.20

14-28 Market-share and market-size variances (continuation of 14-27). Emcee Inc. prepared the budget

for 2017 assuming a 20% market share based on total sales in the Midwest region of the United States. The

total fruit drinks market was estimated to reach sales of 1.25 million cartons in the region. However, actual

total sales volume in the western region was 1.5 million cartons.

Calculate the market-share and market-size variances for Emcee Inc. in 2017. (Calculate all variances in

terms of contribution margin.) Comment on the results.