Hi John. I found a question (40.3) on bpp book (for exams up to 2015). Here it goes:
The following budgeted and actual sales information relates to a budget period for a company that makes and sells three products:
Products Budgeted Sales priece p.u. actual sales units
X 5k 20 5800
Y 3k 35 2700
Z 2k 40 1800
It is said that contribution per unit for each product is 40% of the standart sales price.
They are asking for sales quantity variance for the period.
The thing I dont understand is: why finding each product variance separetly and then adding them up is wrong method to do. Ending up with the answer of 1000 A
The answer showed in the book uses weighted average method for the contribution. And they end up with 3240 F.
Thank you for your answer.
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sales quantity variance. weighted avg. method
11y ago#2Josy87 is right in saying that the correct answer should be 3420 (F) - it is a typing error by BPP.
To get the variance you compare the budgeted total contribution with the total sales at standard mix and standard contribution. (The actual mix is different but this is the mix variance.
The actual total sales are 10,300 units, and if they were mixed in the correct ratio it would be X: 5/10 x 10300 = 5150; Y: 3/10 x 10300 = 3090; Z: 2/10 x 10300 = 2060.
If you compare the total standard contribution for the original budget sales, and for the sales calculated in the line above, then you will get 3420 as the variance.
(You can do it for each separately or you can cost out in total - it will be the same in both cases)
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