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Yellow sells two types of squash ball, the type A and the type B. The standard contribution
from these balls is $4 and $5 respectively and the standard profit per ball is $1.50 and $2.40 respectively. The budget was to sell 5 type A balls for every 3 type B balls.
Actual sales were up 20,000 at 240,000 balls with type A balls being 200,000 of that total.
Yellow values its stock of balls at standard marginal cost.What is the value of the sales quantity variance?
1. The answer is $87,500(F).
2. How to obtain the budgeted sales?If sales were up by 20,000, then the budgeted sales must have been 220,000 !
So you can either compare 220,000 at standard mix at standard contribution, with 240,000 at standard mix and standard contribution,
or, alternatively (and quicker), just cost out the extra 20,000 at standard mix and standard contribution.“If sales were up by 20,000, then the budgeted sales must have been 220,000 !”
What do you mean by that sentence?
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