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Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114Sales Mix and Quantity Variances
Mattie’s Vineyards is a producer and wholesaler of three varieties of white wine. Sales data for November are given below:
| Sauvignon Blanc | Chardonnay | Riesling | Total |
Budgeted selling price | $700 | $825 | $675 |
|
Budgeted variable cost | $500 | $600 | $475 |
|
Budgeted selling quantity | 10,400 | 3,900 | 11,700 | 26,000 |
Actual selling price | $725 | $810 | $710 |
|
Actual variable cost | $510 | $610 | $510 |
|
Actual selling quantity | 8,000 | 6,000 | 11,000 | 25,000 |
Required
a Compute the sales price variance for all three wines.
b Compute the activity variance for Mattie’s Vineyards for the year.
c Compute the mix and quantity variances for Mattie’s Vineyards for the year.
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Step 1 of 6
MV deals with three types of white wines. The budgeted selling price and budgeted variable cost and budgeted selling quantities of all the three varieties of white wines are given. The actual selling price and variable cost and selling quantities for all the three varieties of white wines are also been given.
a.
The sales price variance for all the three varieties of wines is computed by the difference between the standard sales of actual sales quantities and actual sales.
Standard contribution margin for actual quantity sold
| SB | CD | R | |
| Standard selling price (A) | $7 | $8.25 | $6.75 |
| Standard variable cost(B) | $5 | $6 | $4.75 |
| Standard contribution margin (A-B)=C | $2 | $2.25 | $2 |
| Actual selling quantity(D) | 8,000 | 6,000 | 11,000 |
| Standard sales for actual selling quantity (A×D) | $56,000 | $49,500 | $74,250 |
The actual contribution margin for all the three varieties of wines are as under:
| SB | CD | R | |
| Actual selling price (A) | $7.25 | $8.10 | $7.10 |
| Actual selling quantity(B) | 8,000 | 6,000 | 11,000 |
| Standard contribution margin for actual selling quantity (A×B) | $58,000 | $48,600 | $78,100 |
The price variance for all the three wines calculated as under:
| SB | CD | R | |
| Actual sales (A) | $58,000 | $48,600 | $78,100 |
| Standard sales (B) | $42,000 | $49,500 | $74,250 |
| Price variance (A-B) | $16,000F | $900U | $3,850F |
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