Question
PLS ANSWER ALL THE QUESTIONS CLEARLY AND SHOW YOUR CALCULATIONS STEP BY STEP.
Harry's Electronics manufactures TVs and VCRs. During February, the following activities occurred:
TVs VCRs
Budgeted units sold 17,640 66,360
Budgeted contribution margin per unit $90 $156
Actual units sold 20,000 80,000
Actual contribution margin per unit $100 $158
Required:
Compute the following variances in terms of the contribution margin.
a. Determine the total sales-mix variance.
b. Determine the total sales-quantity variance.
c. Determine the total sales-volume variance.
Explanation / Answer
Working: Budgets TVs VCRs Total Budgeted units sold 17640 66360 84000 Budgeted contribution margin per unit $90 $156
Actuals TVs VCRs Total Actual units sold 20000 80000 100000 Actual contribution margin per unit $100 $158
Actuals TVs VCRs Total Actual units sold 20000 80000 100000 Actual contribution margin per unit $100 $158 Actual sales mix of TVs = 20000 / 100000
= 20% Actual sales mix of VCRs = 80000 / 100000
= 80% Budgeted sales mix of TVs = 17640 / 84000
= 21% Budgeted sales mix of VCRs = 66360 / 84000
= 79% a. Mix variance = (Actual sales mix - Budgeted sales mix)*Total actual sales volume * Standard contribution per unit For TVs = (0.20 - 0.21)*100000*90
= $90,000 (A) Fro VCRs = (0.80 - 0.79)*100000 * 156
= $156,000(F) Total = 156000 - 90000
= $66,000 (F) b. Sales quantity variance = (Actual sales volume - Budgeted sales volume) * Standard mix *Contribution per unit For TVs = (100000 - 84000) * 0.21 * 90
= $302,400 For VCRs = (100000-84000) *0.79*156
= $1,971,840 Total = 302400 + 1971840
= $2,274,240 c. Total sales volume variance = (20000 - 17640)*90+(80000 - 66360)*156
= $2,340,240 Verification: Mix + Quantity variance = Total sales volume variance Mix + Quantity variance = 66000+2274240 Total sales volume variance
= $2,340,240 Thank you....
Budgets TVs VCRs Total Budgeted units sold 17640 66360 84000 Budgeted contribution margin per unit $90 $156