Question
Pricing Strategy, Sales Variances Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following. Budgeted
Pricing Strategy, Sales Variances
Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following.
Budgeted Volume | Budgeted Price | |
---|---|---|
Product R | 113,200 | $27 |
Product S | 154,500 | 22 |
Product T | 21,500 | 21 |
At the end of the year, actual sales revenue for Product R and Product S was $3,018,600 and $3,314,000, respectively. The actual price charged for Product R was $26 and for Product S was $20. Only $10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $558,500 for this product.
Required:
1. Calculate the sales price and sales volume variances for each of the three products based on the original budget.
Sales price variance | Sales volume variance | |||
Product R | $ | $ | ||
Product S | $ | $ | ||
Product T | $ | $ |
2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product?
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