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.

Budgeted	Budgeted		Budgeted		Budgeted		Budgeted	Budge1
( I l x l		l x l		l ) + ( l		l x l		I x .

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

favorable unfavorable
	Chic Plain	wine

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%