Question
ables2You is a table manufacturing company based in County Antrim. The company uses a standard variable costing system and serves both the UK and export
ables2You is a table manufacturing company based in County Antrim. The company uses a standard variable costing system and serves both the UK and export markets. They make two types of tables, Table 1 and Table 2. Each table has a separate manufacturing facility, but a central sales department promotes and distributes the tables. The sales department has authority to change selling prices and promote products more heavily than originally planned, if appropriate. A summary of the budgeted and actual results for last month are as below:
Budget | ||||
Table 1 | Table 2 | Total |
| |
Sales volume (units) | 10,395 | 8,505 | 18,900 |
|
Sales () | 254,677 | 272,160 | 526,837 |
|
Materials () | 93,555 | 80,798 | 174,353 |
|
Labour () | 66,528 | 96,957 | 163,485 |
|
Fixed overheads () | 46,200 | 51,100 | 97,300 |
|
Total costs () | 206,283 | 228,855 | 435,138 |
|
Profit () | 48,394 | 43,305 | 91,699 |
|
Actual | |||
Table 1 | Table 2 | Total | |
Sales volume (units) | 13,720 | 5,880 | 19,600 |
Sales () | 356,720 | 179,340 | 536,060 |
Materials () | 150,225 | 50,872 | 201,097 |
Labour () | 95,550 | 70,000 | 165,550 |
Fixed overheads () | 45,500 | 45,150 | 90,650 |
Total costs () | 291,275 | 166,022 | 457,297 |
Profit () | 65,445 | 13,318 | 78,763 |
The sales manager has noted that customers regard Table 1 and Table 2 as alternative products, and the two compete with each other to some degree. At the time of preparation of the budget above, it was assumed that the total market for both tables would be 34,000 tables. However, the actual size of the market was 37,000.
What is the total sales mix variance?
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