- May 22, 2021 at 7:42 pm #621471Shi2004Participant
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A company sells two products X and Y. Product X sells for $30 oer unit and achieves a standard contribution of $12 per unit which is 40% of selling price. Product Y a new product sells for $80 per unit and achieve a standard contribution of just $10 per unit which is 12.5% of selling price. Budgeted sales are 5000unit of X and 3000 units of Y.
However the sudden cancellation of an advertising campaign for product Y has meant that sales for the product will be well below budget and there has been price discounting in an attempt to obtain sales for product. Sales of X were in line with the budget. Which of the following sales variance would you expect to show a favourable variance for the period?
A. Sales mix variance
B. Sales price variance
C. Sales quantity variance
D. Sales volume variance
The answer is A why A?May 23, 2021 at 10:43 am #621508John MoffatKeymaster
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The ratio of the sales of X to the sales of Y will be greater than the budgeted ratio. X gives a greater contribution per unit, and therefore the mix variance will be favourable.
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