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Hi John!
Y sells 2 types of balls; A and B and the std contribution are $4 and $5 respectively. The budget was to sell 5 A for every 3 B.
Actual sales were up 20,000 at 240,000 balls with balls A being 200,000 of the total.
What is the sales mix and quantity variance?-The answer is $50,000(A) and $87,500(F) respectively.
-Could you help me to deal with “sell 5 A for every 3 B” and also how to obtain the answer?Thanks.
Selling 5 A for every 3 B means that out of every 8 sold, 5 should be A and 3 should be B.
Budget sales were A: 220,000 x 5/8 = 137,500; B: 220,000 x 3/8 = 82,500.
At standard contribution these give a budgeted contribution of 962,500Actual sales at standard mix would be A: 240,000 x 5/8 = 150,000; B: 240,000 x 3/8 = 90,000.
At standard contribution these would give a total contribution of 1,050,000.The difference = 1,050,000 – 962,500 = 87,500 (F) and is the quantity variance.
Actual sales are A: 200,000; B: 40,000.
At standard contributions these would give a total contribution of 1,000,000.The difference between this and actual sales at standard mix is 1,000,000 – 1,050,000 = 50,000 (A) and is the mix variance.
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