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Dear Open Tuition Tutors! Firstly I would like to say you an enormous Thank You for being helpful to everyone who needs it! It is amazing that You are dedicating so much time for all of us here!
I failed P01 2 times but!!! Not giving up yet( I must say I find the the exam much much harder than Kaplan or BPP Mocks!!)
I have an answer for my question but I cannot get to this figure of $1500.00
A company producing two products- A and B.
Product A budgeted sales-800,actual-850 and standard profit-$6.50
Product B budgeted sales 400,actual-650,standard profit-$2.00 per unit.What is favorable sales quantity profit variance? (the answer says $1,500.00).
Thank You and Warmest Regards,
AnnaHi Both,
Just when I thought I got my head around the sales mix variances, this topic now confused me again.
I thought that we compared the standard mix with the actual sales @ standard mix and multiplied it by the standard profit:
A (800 – 1500/12*8) * 6.5 = (800-1000)*6.5 = 1300 F
B (400 – 1500/12*4) * 2 = (400-500)* 2 = 200 F
together: 1500FHi Edit,
Thanks for your help.
Yes you are correct – the sales quantity variance compares the actual sales in standard proportions to our budgeted figures. These are then multiplied by each product’s standard margin to get a total sales quantity variance.
The working is exactly as you described:
A (800 – 1500/12*8) * 6.5 = (800-1000)*6.5 = 1300 F
B (400 – 1500/12*4) * 2 = (400-500)* 2 = 200 F
together: 1500FYou are not confused – thats is absolutely correct ! Thank you
Dear Cath, Dear Edit,
Thank you so so much for your replies,it was so helpful!
I think I took the ,,easy” route but realising now that I had to look at this question as at mix variance!Edit-all the very best Luck in your exam!!!!
Cath-thank you for being here for all of us-motivating, mentoring and supporting! So pleased I have an opportunity to ask and get the help!!!Warmest Wishes,
Anna
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