Olivet Devices sells two models of fitness devices. The budgeted price per unit for the wireless model is $54 and the budgeted price per unit for the wireless and cellular model is $99. The master budget called for sales of 52,800 wireless models and 13,200 wireless and cellular models during the current year. Actual results showed sales of 39,000 wireless models, with a price of $51 per unit, and 16,800 wireless and cellular models, with a price of $96 per unit. The standard variable cost per unit is $41 for a wireless model and $76 for a wireless and cellular model. Required: a. Compute the sales activity variance for these data. b. Break down the sales activity variance into mix and quantity parts.

Olivet Devices sells two models of fitness devices. The budgeted price per unit for the wireless model is $54 and the budgeted price per unit for the wireless and cellular model is $99. The master budget called for sales of 52,800 wireless models and 13,200 wireless and cellular models during the current year. Actual results showed sales of 39,000 wireless models, with a price of $51 per unit, and 16,800 wireless and cellular models, with a price of $96 per unit. The standard variable cost per unit is $41 for a wireless model and $76 for a wireless and cellular model. Required: a. Compute the sales activity variance for these data. b. Break down the sales activity variance into mix and quantity parts.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 29E: Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima....

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Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,000 for the Sleepeze, 12,000 for the Plushette, and 5,000 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: a. Salaries for his office (including himself at $65,000, a marketing research assistant at $40,000, and an administrative assistant at $25,000) are budgeted for $130,000 next year. b. Depreciation on the offices and equipment is $20,000 per year. c. Office supplies and other expenses total $21,000 per year. d. Advertising has been steady at $20,000 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high- end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign. e. Commissions on the Sleepeze and Plushette lines are 5 percent of sales. These…
Sara’s Systems manufactures audio systems for cars. Two models are produced: The Standard model has a budgeted price of $235 and a standard variable cost of $115. The Blaster model has a budgeted price of $515 and a standard variable cost of $195. At the beginning of the year, Sara estimated that she would sell 6,140 Blaster models and 24,560 Standard models. The actual results for the year showed that 7,460 Blaster models were sold for total revenues of $3,516,200. A total of 27,000 Standard models were sold for revenues of $7,120,000. Required: a. Compute the activity variance for the year. b. Compute the mix and quantity variances for the year.
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Olivet Devices sells two models of fitness devices. The budgeted price per unit for the wireless model is $47 and the budgeted price per unit for the wireless and cellular model is $92. The master budget called for sales of 47,200 wireless models and 11,800 wireless and cellular models during the current year. Actual results showed sales of 35,500 wireless models, with a price of $44 per unit, and 14,700 wireless and cellular models, with a price of $89 per unit. The standard variable cost per unit is $34 for a wireless model and $69 for a wireless and cellular model. Required: a. Compute the sales activity variance for these data. b. Break down the sales activity variance into mix and quantity parts.
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