A-Zone Media sells two models of e-readers. The budgeted price per unit for the

Question

A-Zone Media sells two models of e-readers. The budgeted price per unit for the wireless model is $202 and the budgeted price per unit for the wireless and cellular model is $436. The master budget called for sales of 11,000 wireless models and 3,000 wireless and cellular models during the current year. Actual results showed sales of 8,500 wireless models, with a price of $250 per unit, and 4,600 wireless and cellular models, with a price of $600 per unit. The standard variable cost per unit is $90 for a wireless model and $210 for a wireless and cellular model.

Required:

a. Compute the activity variance for these data. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

b. Compute the mix and quantity variance for these data. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Explanation / Answer

a. activity variance = (4885000-3748000) = 1137000 F

b. Quantity variance

Wireless (8500-11000) = 2500 U

Wireless and Cellular (4600-3500) = 1100F

total activity variance = 1400 U

Mix variance

mixed variance =

(actual units sold * (actual sales mix% - budgeted sales mix %) * budgeted contribution margin per unit).

wireless = 8500*(65-76)*112 = 10472000 U

wireless and cellular = 4600*(35-24)*226 = 11435600 F

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budgeted actual price units total price units total wireless 202 11000 2222000 250 8500 2125000 wireless and Cellular 436 3500 1526000 600 4600 2760000 14500 3748000 13100 4885000

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