Exercise 17-20 Sales Mix and Quantity Variances (LO 17-3) Renee’s Rings manufact

Question

Exercise 17-20 Sales Mix and Quantity Variances (LO 17-3) Renee’s Rings manufactures college rings. Two models are produced: The Spirit model with a budgeted price of $610 and a standard variable cost of $310. The Chancellor model has a budgeted price of $1,310 and a standard variable cost of $510. At the beginning of the year, Renee estimated that she would sell 2,200 Chancellor rings and 7,800 Spirit rings. The actual results for the year showed that 1,800 Chancellor rings were sold for total revenues of $2,088,000. A total of 7,300 Spirit rings were sold for revenues of $4,635,500.

Required:

(a) Compute the activity variance for Renee’s Rings for the year. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations.)

(b) Compute the mix and quantity variances for the year. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations.) ReferenceseBook & Resources Exercise

Explanation / Answer

Sales Activity Variance (Budgeted Sales-Unit sales at standard Mix)*Standard contibution margin per unit Standard Mix % of mix Sales Variable cost Standard contribution per unit Chancellor Ring 2200 22 11 610 310 310 Spirit Rings 7800 78 39 1310 510 510 Total 10000 Actual sales 9100 ACTUAL Sales in standrad mix Chancellor Rings 9100*22% 2002 Spirit Rings 9100*78% 7098 9100 Sales Activity Variance (2200-2002)*310 61380 U Chancellor Rings (7800-7098)*510 358020 U Spirit Rings Sales Activity Variance 419400 U Sales Mix Variance (Actual Sales-Unit sales at standard Mix)*Standard contibution margin per unit (1800-2002)*310 -62620 U Chancellor Rings (7300-7098)*510 103020 F Spirit Rings Total sales mix variance 40400 F Sales Volume Variance (Actual Sales-Budgeted Sales)*Standard Contribution per unit (1800-2200)*310 -124000 U Chancellor Rings (7300-7800)*510 -255000 U Spirit Rings Total -379000 U

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.