Sales Productivity Variance You\'ve been hired as a consultant for an health dri

Question

Sales Productivity Variance

You've been hired as a consultant for an health drink company to help assess recent performance.

2.50

1.00

1. Compute the variances for the individual flavors and total sold.

a) Sales volume

b)Sales mix, up to 6 decimal places

c)Sales Quanity

BUDGETED DATA ACTUAL RESULTS DRINK QTY ASP ($) VARIABLE COST($) QTY ASP($) VARIABLE COST V-sky 250,000 1.20 0.50 180,000 1.00 0.45 c-class 300,000 1.50 0.60 270,000 1.35 0.50 super-detox 200,000 1.80 0.70 330,000 2.00 0.75 Armored-defense 50,000

2.50

1.00

180,000 3.00 1.20

Explanation / Answer

Sales volume variance

V sky = (180000 - 250000) * ($1.20 - $0.50)

= ($49000) Unfavourable

C class = (270000 - 300000)* ($1.50 - $0.60)

= ($27000) unfavourable

Superdetox = (330000 - 200000) * ($1.80 - $0.70)

= $143000 favourable

Armored defense = (180000 - 50000) * ($2.50 - $1.00)

= $195000 favourable

Sales quantity variance:

V sky = (180000 - 250000) * 0.31 * 0.7

= $15190

C class = (270000 - 300000) * 0.37 * 0.9

= $9990

Super detox = (330000 - 200000) * 0.25 * 1.1

= $35750

Armored defense = (180000 - 50000) * 0.07 * 1.5

= $13650.

Sales mix variance

V sky = (0.19 - 0.31) * 180000 * $0.7

= $15120 Unfavourable

C class = (0.28 - 0.37) * 270000 * 0.9

= $21870Unfavourable

Super detox = (0.34 - 0.25) * 330000 * 1.1

= $32670favourable

Armored defense = (0.19 - 0.07) * 180000 * 1.5

= $32400favourable.

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