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Dear tutor, after calculating sales mix and sales quantity variance I also calculared sales volume and sales price variance for the discussion part there has not been given actual sales price per mini and full valet so is this possible i find its actual selling price per valet in the following way?
full valets total revenue: total actual revenue 319400*4000/7980=160100
selling price per full valers=160100/4000=40$mini valets total revenue=total actual revenue 319400*3980/7980=159300
selling price per mini valets=159300/3980=40$
Sales price variance-200A
Valets—————–actual sales units————–ASP——SSP——DIf in $—————-Variances
full valets——————-4000———————-40————–50========10A———-40000A
mini valets—————–3980———————-40————–30==========10F———39800F
You must not waste time like this in the exam.
The question asks you to discuss the sales performance not the revenue (and puts the word sales in capital letters to make this clear).
The question says that the prices charged to customers never changes, and so there cannot be a sales price variance!!
Dear Tutor, when i discuss the sales mix and quantity variance I also calculate sales volume and price variance to make link among them as it works very well.sales price fluctuations in the market showen in the scenaior but SR given in the question as well as its volumes together with both mini and full valets.So i can find here sales price per product.
But why do you want to know the sales price? It is not asked for and there is obviously no sales price variance anyway!!!
Dear Tutor look at my analysis;
Sales price variance overall is $200 adverse. This resulted due to full valets variance is $40000 unfavourable and mini valets variance is $39800 favourable. The major reason for this is global financial crises arose and as a consequence household disposable income reduced by 30% as well as petrol and food prices increased considerably
Sales volume variance overall is $48144 favourable. This resulted du to full valets variance is $8920 favourable and mini valets variance is $32670 favourable. The major reason is since household disposable income has been decreased by 30%, petrol and food prices rose, it caused people to save more money than buying new cars. Therefore, it increased car maintenance demand and as a result mini valets’ sales demand increased more than full valets’ sales demand when comparing the two in isolation but compared to the budget level, their demand both rose.
Sales mix variance is adverse by $6554 due the lower sales volumes of full valets having the higher contribution than mini valets having the lower contribution. In other words, Valet co sold less more profitable porduct what whould have been expected to sell. This is because customer bought mini valets as it was cheaper than full valets.
Sales quantity variance is $48144 favourable mnainly because actual sales in budget mix was higher than budget sales. Since there were similar competitor in the market as well as reduction in the prices of budget price compated to actual price, it showed favourabe variance.
Considerig the overall performance, the sales performance seems to be satisfactory above the discussion point of view.
I analyse in this way and it looks very logical becase i link everything in the scenario to support my ideas.
I have already written twice that there is no sales price variance – there cannot be given that the question says that the price never changes (and the revenue for the actual sales checks – it is $50 for a full valet and $30 for a mini valet. (4000 x $50) + (3980 x 30) = $319,400, which is the actual revenue.
Otherwise fine.
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