**Sales Variance Analysis**The table below compares budgeted figures against actual figures for a particular product. The aim is to compute the sales volume variance.| Category | Budgeted | Actual ||-------------------------------|-----------------|----------------|| **Sales Volume** | 110 units | 100 units || **Sales Price** | $50 per unit | $55 per unit || **Unit Variable Cost (VC)** | $30 per unit | $33 per unit || **Input Price for Direct Labor (DL)** | $10 per hour | $12 per hour || **Input Quantity per Unit for DL** | 1.5 hours | 2 hours |**Compute Sales Volume Variance**Sales volume variance measures the effect on operating income arising from the difference between the actual and budgeted sales volume. It can be calculated using the formula:\[ \text{Sales Volume Variance} = (\text{Actual Sales Volume} - \text{Budgeted Sales Volume}) \times \text{Budgeted Contribution Margin per Unit} \]**Contribution Margin per Unit (Budgeted):** \[ \text{Budgeted Sales Price} - \text{Budgeted Unit VC} = \$50 - \$30 = \$20 \]**Sales Volume Variance:**\[ (100 - 110) \times \$20 = -10 \times \$20 = -\$200 \]This results in a **$200 unfavorable** variance.> _Options for Answer:_> - $200 favorable> - [Unfavorable variance calculated above] This analysis helps businesses understand the impact of sales volume deviations and adjust their strategies accordingly.

Sales volume variance = (Actual volume - Budgeted volume) x Budgeted price

Sales volume Sales price Unit VC Input price for DL Input quantity per unit for DL Budgeted 110 units O $200 favorable $50 per unit $30 per unit $10 per hour 1.5 hours per unit Compute sales volume variance Actual 100 units $55 per unit $33 per unit $12 per hour 2 hours per unit

Sales volume Sales price Unit VC Input price for DL Input quantity per unit for DL Budgeted 110 units O $200 favorable $50 per unit $30 per unit $10 per hour 1.5 hours per unit Compute sales volume variance Actual 100 units $55 per unit $33 per unit $12 per hour 2 hours per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q5
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Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Additional data concerning these products are listed below. Grinding minutes per unit Selling price per unit Variable selling cost per unit Monthly demand in units A $ 14.00 19.10. 4.00 Products B D $9.90 $ 10.70 $ 10.30 33.30 40.10 27.10 2.40 2.30 2.90 26.20 34.50 26.30 36.90 $63.30 $ 73.90 $72.60 $90.20 A 3.50 $ 75.80 $ 1.90 3,700 Products: B 5.00 $ 93.20 $0.90 3,700 C D 3.10 4.00 $ 87.10 $ 103.90 $ 3.00 $ 1.30 2,700 2,900 The grinding machines are potentially the constraint in the production facility. A total of 50,400 minutes are available per month on these machines. Direct labor is a variable cost in this company. Up to how much should the company be willing to pay for one additional minute of grinding machine time if the company has made the best use of the…
MSRP $5.39 $4.99 Volume Discount 35% 35% Unit Cost $1.49 $1.49 Promotional Allowance 15% 20% Advertising and Promotion $25 Million $20 Million Allocated Fixed Costs $68 M $12 M Projected Unit Sales 115M 10M A firm has an existing product with a combined advertising and promotion budget of $25.0 million and with projected sales of 115 million units. They are launching a new product with a budget of $20.0 million and estimated sales of 10 million units in the first year. The sales force expense of $10 million has been allocated equally between products; 90% of the plant overhead has been allocated to the existing product, and 10%, to the new product. Additional values for each product are shown in the table above. 1. Production anticipates it will need to increase capacity to 140 million units, adding $10.0 million to annual fixed costs. If the product allocation of the plant cost is also changed to 80%/20%, what is the impact on break-even units? Please use the chart…
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Sales fixed cost $2,000,000 units sold 50 unit selling price $140,000 profit $400,000 Find the variable cost per unit and the breakeven point.
PLS ABC corporation produces plastic bottles. Details of cost are given below: Standard unit quantity per plastic bottle Actual production of bottles Actual quantity used Actual cost of plastic Standard price 0.045 ounce per plastic bottle 240,000 110,000 S0.042 per ounce $0.045 per ounce Material price variance for ABC corporation is: a. $330 Unfavorable b. $720 Favorable c. $330 Favorable d. $720 Unfavorable
Question 4 Palladium (Pty) Ltd has given you the following information relating to normal (budgeted) information and its expected promotional information: Normal Data Weekly sales (units) Normal variable cost per unit Contribution margin % Palladium (Pty) Ltd would like to boost the sales of its products and predicts that by applying a promotional discount of 20% to its product and incurring an additional fixed cost of R250 000, unit 150 000 R0,30 80% sales will be 2 and a half times higher than normal sales. Normal variable cost per unit is expected to remain the same for the promotional period. The promotional period is expected to last six (6) weeks. Q.4.2 Calculate the unit sales multiplier needed during the promotion to break even.
A company has the following information for one of its products: Standard per item (£) Actual per item (£) Selling price 20 22 Material 6 8 Labour 3 4 Variable overhead 2 4 It budgeted to sell 1,000 units but actually sold 100 less than this. What is the sales price variance? A £1,800 F B £2,000 F C £2,000 A D £1,800 A
Selling price per unit $ 100Variable expenses per unit $ 40Fixed expenses per month $ 60,000 The break-even point volume of units is: a. 0 b. 360 c. 720 d. 1000
Sales $ 75,000Variable Costs 5,000Fixed Costs 11,000 Operating Income 59,000 Compute the budgeted operating income if sales doubled in the next month.
A company that produces and sells a single product has the following characteristics: Selling price Variable expenses Contribution margin Per Unit $220 44 $176 Multiple Choice Percent of Sales 100% 20% 80% The company is currently selling 8,000 units per month. Fixed expenses are $901,000 per month. Management is considering using a new component that would increase the unit variable cost by $10. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect or the company's monthly net operating income of this change?