Question

Jackson.Inc, manufactures two products that it sells to the same market. Excepted below are its budgeted and actual operating results for the year just completed:

		Budget	Actual
Units sale
	Product X	22500	42000
	Product Y	90000	80000
Unit contribution margin
	Product X	$4.80	$3.90
	Product Y	$13.00	$14.00
Unit selling price
	Product X	$13.00	$14.00
	Product Y	$30.00	$29.00

Industry volume was estimated to be 1875000 units at the time the budget was prepared. Actual industry volume for the periods was 2440000 units. Jackson measure variances using contribution margin

The market size variances is

Total sales quality variances is

The total contribution margin sales volume variances of the period

The total selling price variance the period is

Answer 1

A)	market size variances is

X	Y
13	30
13(42000-22500)*.06	30(80,000-90,000)*.06
15210	-18000

1875000	22500
	90000
	112500
	6%

MSZV = P x (MSZA-MSZB) x MSHB
P = the weighted price average of each product
MSZA = actual market size
MSZB = budgeted market size
MSHB = budgeted market share

B)	Sales Quantity Variance
	=(Budgeted sales - Unit Sales at Standard Mix)xStandard Contribution*
	Where marginal costing is used
		X	Y
Calculate the standard mix ratio	standard mix ratio
		22,500.00	90,000.00	1,12,500.00
		20%	80%
	sales qty in proporton to standard mix
		total sales
		X	Y
		42000	80000	122000
		24400	97600	122000
	calcuate diff between actual sales and sales qty in std mix
		X	Y
		22,500.00	90,000.00
		24,400.00	97,600.00
		-1,900.00	-7,600.00
	std contribuiion per unti
		X	Y
		4.8	13
	calcuate varaince for each produt
		X	Y
		4.8	13
		-1,900.00	-7,600.00
		-9120	-98800	favourable
	add indivudual vairance
		-107920
C)	Sales Volume Variance =
	(AU) (BCM) - (BU)(BCM) or (AU-BU)(BCM)
		X	Y
	budget	22,500.00	90,000.00
	acutl	42000	80000
	budget	4.8	13
		(42000-22500)*4.8	(80000-90000)*13
		93600	-130000
D)	Sales Price Variance = Actual sales revenue - Flexible budget sales revenue for actual units sold
	(AP)(AU) - (BP)(AU) or (AP-BP)(AU)
		X	Y
	AP	14	29
	BP	13	30
	AU	42000	80000
		(14-13)*42000	(29-30)*80000
		42000	-80000