Renee’s Rings manufactures college rings. Two models are produced: The Spirit mo
ID: 2484797 • Letter: R
Question
Renee’s Rings manufactures college rings. Two models are produced: The Spirit model with a budgeted price of $530 and a standard variable cost of $230. The Chancellor model has a budgeted price of $1,230 and a standard variable cost of $430. At the beginning of the year, Renee estimated that she would sell 1,700 Chancellor rings and 8,300 Spirit rings. The actual results for the year showed that 2,100 Chancellor rings were sold for total revenues of $2,268,000. A total of 9,400 Spirit rings were sold for revenues of $5,217,000. Required:
Compute the quantity variance 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.)
Explanation / Answer
Standard contribution for Spirit model = 530 -230 = 300
Standard deduction for Chancellor model = 1230 -430 ] = 800
QUntity variance = SC [AQ-SQ]
= 300 [ 9400 -8300 ] + 800 [2100-1700]
= [300 * 1100 ] + [800* 400]
= 330000 + 320000
= 650000 F