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 the first quarter (Qtr. 1) and the second quarter (Qtr. 2) of the current fiscal year.

	Qtr. 2			Qtr. 1
Sales units		12,000			10,000
Sales mix for each product
Starlight		20	%		25	%
Moonlight		80	%		75	%
Price
Starlight		$35.00			$35.00
Moonlight		$85.00			$90.00
Variable cost per unit
Starlight		$22.00			$22.00
Moonlight		$48.00			$48.00
Fixed cost		$150,000			$150,000

1. Calculate a flexible budget contribution income statement for Qtr. 2. (Enter all unfavorable variance answers with a minus sign and all other amounts as positive values.)

HATHWAY PRODUCTS, INC.,
Flexible Budget Contribution Income Statement
	Qtr. 2	Sales Price Variance	Flexible Budget	Sales Volume Variance	Qtr. 1
Sales
Starlight
Moonlight
Total sales	$0	$0	$0	$0	$0
Less: Variable costs
Starlight
Moonlight
Total variable costs	$0		$0	$0	$0
Contribution margin
Starlight
Moonlight
Total contribution margin	$0	$0	$0	$0	$0
Less: Fixed costs
Operating income	$0				$0

2. Calculate the volume variances for each product based both on sales dollars and contribution margin.

	Volume Variances
	Sales Dollars		Contribution Margin
Starlight
Moonlight

3. Determine the sales volume variance, the sales mix variance, and the sales quantity variance for each product, based on contribution margin.

	Mix and Quantity Variances
	Sales Mix Variances		Sales Quantity Variances
Starlight
Moonlight