I need a step by step explanation to the following problem in order to make me u
ID: 2519366 • Letter: I
Question
I need a step by step explanation to the following problem in order to make me understand the solution:
Use the following information for Brief Exercises 16-23 through 16-25. CompuWorld Sells two products, R66 and R100, and calculates sales variances using contribution margin. Pertinent data for the current year follow:
Budgeted
Actual
R66
R100
R66
R100
Selling Price
50
160
55
155
Variable cost per unit
40
90
43
95
Contribution margin
10
70
12
60
Fixed cost per unit
6
30
5
25
Operating income
4
40
7
35
Sales in units
$1,200
$400
$1,000
$1,000
16-26
What is the market size variance?
$51,000F
$68,000F
$71,400F
Budgeted
Actual
R66
R100
R66
R100
Selling Price
50
160
55
155
Variable cost per unit
40
90
43
95
Contribution margin
10
70
12
60
Fixed cost per unit
6
30
5
25
Operating income
4
40
7
35
Sales in units
$1,200
$400
$1,000
$1,000
Explanation / Answer
Note:
1. In absence of the Market Share data 2nd part of the question is not solved
2. I have assumed that in the last line of the table sales units is given
Sales volume variance= (Actual Units- Budgeted Units )*Budgeted price R66 R100 Actual Units 1000 1000 Budgeted Units 1200 400 Budgeted price 50 160 Sales volume variance= -10000 96000 Selling price variance= (Actual SP- Budgeted SP)*Actual Units R66 R100 Actual SP 55 155 Budgeted SP 50 160 Actual Units 1000 1000 Selling price variance= 5000 -5000 Sales mix variance= (Actual Units- Budgeted Units )* Budgeted Contribution per Unit R66 R100 Actual Units 1000 1000 Budgeted Units 1200 400 Budgeted Contribution per Unit 10 70 Selling price variance= -2000 42000Related Questions
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