I need a step by step explanation to the following problem in order to make me u
ID: 2519364 • Letter: I
Question
I need a step by step explanation to the following problem in order to make me understand the solution:
Use the following information for Brief Exercises 16-23 through 16-25. CompuWorld Sells two products, R66 and R100, and calculates sales variances using contribution margin. Pertinent data for the current year follow:
Budgeted
Actual
R66
R100
R66
R100
Selling Price
50
160
55
155
Variable cost per unit
40
90
43
95
Contribution margin
10
70
12
60
Fixed cost per unit
6
30
5
25
Operating income
4
40
7
35
Sales in units
1,200
400
1,000
1,000
16-23
What is the R100 sales mix variance?
$20,000F
$30,000F
$35,000F
$40,000F
$70,000F
Budgeted
Actual
R66
R100
R66
R100
Selling Price
50
160
55
155
Variable cost per unit
40
90
43
95
Contribution margin
10
70
12
60
Fixed cost per unit
6
30
5
25
Operating income
4
40
7
35
Sales in units
1,200
400
1,000
1,000
Explanation / Answer
SOLUTION
R100 Sales mix variance = $35,000 F.
Sales mix ratio-
Sales mix variance =
= (Actual sales mix of the product - Budgeted sales mix of the product) * Total units sold * Budgeted contribution margin per unit of the product
= (0.5 - 0.25) * 2,000 * $70 = $35,000 F
Actual Quantity Actual Ratio Budgeted Quantity Budgeted Ratio R66 1,000 0.5 1,200 0,75 R100 1,000 0.5 400 0.25 Total 2,000 1 1,600 1Related Questions
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