Question
Show steps/work!!!!! Special Tea Products (STP) has an exclusive contract with Tea Distributors. Two brands of Teas areimported, Strong and Mild, and sold to retail
Show steps/work!!!!!
Special Tea Products (STP) has an exclusive contract with Tea Distributors. Two brands of Teas areimported, Strong and Mild, and sold to retail outlets. The monthly budget for the contract is based on acombination of last year's performance, a forecast of general industry sales, and the company'sexpected share of the Canadian market for imported Tea. The following information is provided for themonth of May:
Budgeted Strong | Mild | Actual Strong | Mild | |
Price per kg | $2.00 | $3.00 | $2.50 | $2.50 |
Variable cost /kg | 1.00 | 1.50 | 1.00 | 2.00 |
Cont. margin | $1.00 | $1.50 | $1.50 | $0.50 |
Sales (in kg) | 2,000 | 1,500 | 1,700 | 1,800 |
Budgeted fixed costs are $1,750. Actual fixed costs are $2,000.
What is the STP sales-volume variance (contribution margin) for Strong tea?
a. | $900 unfavourable |
b. | $600 unfavourable |
c. | $300 unfavourable |
d. | $600 favourable |
e. | $900 favourable |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started