Question
The Kazu Corporation sells two brands of wine glasses: Plain and Chic. Kazu provides the following information for sales in the month of June 2011:
The Kazu Corporation sells two brands of wine glasses: Plain and Chic. Kazu provides the following information for sales in the month of June 2011:
(Click the icon to view the information for sales.)
All variances are to be computed in contribution-margin terms.
Requirements
Calculate the sales-quantity variances for each product for June 2011.
Calculate the individual-product and total sales-mix variances for June 2011. Calculate the individual-product and total sales-volume variances for June 2011.
3. Briefly describe the conclusions you can draw from the variances.
Requirement 1. Calculate the sales-quantity variances for each product for June 2011.
|
Begin by determining the basic formula for Kazu Corporation's static-budget total contribution margin (C Plain wine glasses Chic wine glasses
Rearrange the formula to determine the sales mix for each product.
The sales-mix percentage of Plain wine glasses is 0%.
The sales-mix percentage of Chic wine glasses is 0%.
Next, determine the formula and compute the budgeted CM based on actual units sold of all products at 1
===============:::::! D ================:: =
Budgeted CM based on actt
units sold at the budgeted n
L-- -'[]L-- -- =
The actual number of all glasses sold is 0 units.
Now determine the formula, then calculate the sales-quantity variances for each product for June 2011. L
favorable (F) or unfavorable (U). (Enter percentages, if any, as decimals to two places, ''X.XX".)
Plain Chic
Budgeted Actual Budgeted
) x ========== ::::::::
) x '.:==========
) x
Requirement 2. Calculate the individual-product and total sales-mix variances for June 2011. Calculate total sales-volume variances for June 2011.
Begin with the individual-product sales-mix variances for June 2011. Determine the formula, then calcula product. Label each variance as favorable (F) or unfavorable (U). (Enter percentages, if any, as decimals
Actual Budgeted Actual Budgeted
4. (cont.) |
Plain Chic |
) ) ) |
x :=::==========::: x :=::======== x :=::========== x :=::======== |
x '------ |
- |
- |
---' x ...._ _ |
The total sales-mix variance is
Now calculate the individual-product sales-volume variances for June 2011. Determine the formula, then each product. Label each variance as favorable (F) or unfavorable (U).
Plain Chic
The total sales-volume variance is
)x
-------- |
) x --------
) x ---------
Requirement 3. Briefly describe the conclusions you can draw from the variances.
Kazu Corporation shows a(n) favorable sales-quantity variance because it sold
unfavorable
fewer more |
wine glasse
|
budgeted. This is partially offset by a(n)
in favor of the higher contribution margin
Data Table
sales-mix variance because the actual mix of wine
glasses.
Static-budget total contribution margin Budgeted units to be sold of all glasses Budgeted contribution margin per unit of Plain Budgeted contribution margin per unit of Chic Total sales-quantity variance
Actual sales-mix percentage of Plain
$ 9,775
2,300 units
$3 per unit
$8 per unit 1,700 u
60%
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