Question

In: Accounting

Sales Variances Foote Corporation produces and sells two lines of shoes: Runner and Dress shoes. The...

Sales Variances

Foote Corporation produces and sells two lines of shoes: Runner and Dress shoes.

The ACTUAL results for 2017 were:

                                                                 Runner            Dress Shoes

Sales Volume (units)                                225,000               95,000

Sales Revenue                                         $ 7,042,500          $5,795,000

Total Variable cost                                   2,902,500             3,192,000

The BUDGET results for 2017 were:

                                                                 Runner            Dress Shoes

Sales Volume (units)                                280,000               70,000

Sales Revenue                                         $ 9,100,000          $4,025,000

Total Variable cost                                   3,248,000             2,247,000

Additional Information

Market size(units):                                Runner                 Dress Shoes

2017 Actual                                        1,325,000                175,000

2017 Budget                                       1,530,000                220,000

Required:

1) Calculate the following (DON’T FORGET TO CALCULATE THE CM/U)

       a) Sales Price Variance    b) Sales Volume Variance

       c)Sales Mix Variance       d) Sales Quantity Variance

       e) Market Share Variance

2)Based on your calculations above, provide a brief comment detailing success (improvement or gain) and one failure(loss or miss) the sales team experienced in 2017 (5Markes)

Solutions

Expert Solution

Standard Sellling price per unit
Runner = 9100000/280000 = 32.5 per unit
Dress shoes = 4025000/70000 = 57.5 per unit

Actual selling price per unit:
Runner = 7042500/225000 = 31.3
Dress shoes = 5795000/95000 = 61

1 a)Sales price variance = (Actual price - Budgeted Price)*Actual sales qty
Runner = (31.3 - 32.5)*225000 = 270000 U
Dress shoes = (61 - 57.5)*95000 = 332500 F

b). Sales volume variance : (Actual Qty - Budgeted Qty)*Budgeted price
Runner = (225000- 280000)*32.5 = 1787500 U
Dress shoes = (95000-70000)*57.5 = 1437500 F

c). Sales mix variance = Total Actual Qty (Average budgeted price per unit of actual mix - Average budgeted price per unit of budgeted mix)
Total Actual Qty = 225000+95000 = 320000
Total Std Qty = 280000+70000 = 350000

Average budgeted price per unit of actual mix:
Runner = 225000 units * 32.5 per unit = 7312500
Dress = 95000 units * 57.5 per unit = 5462500
Total = 7312500+5462500 = 12775000
Average budgeted price per unit of actual mix = 12775000 / 320000 = 39.921

Average budgeted price per unit of budgeted mix = 13125000/350000 = 37.5
Total Budgeted sales = 9100000+4025000 = 13125000

Sales Mix Variance = 320000 * (39.921 - 37.5) = 774720 F

d). Sales Qty Variance = Average budgeted price per unit of budgeted mix * (Total ACtual Qty - Total Budgeted Qty)
= 37.5 * (320000 - 350000) = 1125000 U

e). Market Share Variance = (Actual market share % - Budgeted market share %) * Actual industry sales qty in units * Average budgeted price per unit.
Actual market share = 320000/(1325000+175000) = 320000/1500000 = 21.33%
Budgeted market share = 350000 / (1530000+220000) = 350000/1750000 = 20%

Market Share variance = (21.33%-20%)* 1500000 units * 37.5 = 748125 F

2). From above calculations it can be said that , sales team gained in Selling price and in sales qty of Dress shoes while incurred loss in selling price and sales qty of Runner shoes.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Standard Costs, Decomposition of Budget Variances, Direct Materials and Direct Labor Haversham Corporation produces dress shirts....
Standard Costs, Decomposition of Budget Variances, Direct Materials and Direct Labor Haversham Corporation produces dress shirts. The company uses a standard costing system and has set the following standards for direct materials and direct labor (for one shirt): Fabric (1.5 yds. @ $2.80) $4.20 Direct labor (1.1 hr. @ $20) 22.00    Total prime cost $26.20 During the year, Haversham produced 9,500 shirts. The actual fabric purchased was 14,150 yards at $2.74 per yard. There were no beginning or ending inventories...
Standard Costs, Decomposition of Budget Variances, Direct Materials and Direct Labor Haversham Corporation produces dress shirts....
Standard Costs, Decomposition of Budget Variances, Direct Materials and Direct Labor Haversham Corporation produces dress shirts. The company uses a standard costing system and has set the following standards for direct materials and direct labor (for one shirt): Fabric (1.5 yds. @ $2.80) $4.20 Direct labor (1.1 hr. @ $20) 22.00    Total prime cost $26.20 During the year, Haversham produced 9,900 shirts. The actual fabric purchased was 14,750 yards at $2.74 per yard. There were no beginning or ending inventories...
Shelby Boutique Dress produces two product lines: T-shirts and Sweatshirts. Recent Product Profitability Report prepared by...
Shelby Boutique Dress produces two product lines: T-shirts and Sweatshirts. Recent Product Profitability Report prepared by the accountant follows:                                                                                                       T-SHIRTS                SWEATSHIRTS Production and sales volume units                                                   60,000                      35,000 Selling price                                                                                       $17.00                     $30.00     Direct material                                                                                   $2.50                         $6.20 Direct labor                                                                                         $4.50                         $7.22 Factory overhead                                                                                $2.55                         $4.08 Cost per Unit (cost to make a unit)                                                      $9.55                         $17.50 Gross profit (price minus unit cost)                                                      $7.45                         $12.50 Selling and administrative costs                                                           $4.00                          $7.00       Profit per unit                                                                                         $3.45                         $5.50 Tom, the manager in charge of Sweatshirt operation, has raised concerns about the credibility of the accountant’s Product Profitability Report.   Specifically,...
Ingrum Corporation produces and sells two products. In the most recent month, Product R38T had sales...
Ingrum Corporation produces and sells two products. In the most recent month, Product R38T had sales of $30,000 and variable expenses of $8,240. Product X08S had sales of $51,000 and variable expenses of $20,110. The fixed expenses of the entire company were $35,230. The break-even point for the entire company is closest to
Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales...
Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $25,380 and variable expenses of $8,883. Product Y45E had sales of $32,550 and variable expenses of $17,902. The fixed expenses of the entire company were $24,400. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company: A.) would increase b.) could increase or decrease c.) would not change d.)...
Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales...
Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $28,160 and variable expenses of $8,448. Product Y45E had sales of $36,000 and variable expenses of $19,800. The fixed expenses of the entire company were $23,500. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company: Multiple Choice would decrease. would increase. could increase or decrease. would not change....
Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales...
Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $19,950 and variable expenses of $5,985. Product Y45E had sales of $26,190 and variable expenses of $10,476. The fixed expenses of the entire company were $17,000. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company: Multiple Choice would increase. would decrease. could increase or decrease. would not change....
Oxford Co. produces and sells two lines of t-shirts, Classic and Mod. Oxford provides the following...
Oxford Co. produces and sells two lines of t-shirts, Classic and Mod. Oxford provides the following data. Compute the sales price and the sales volume variances for each product. Budget Actual Unit sales price – Classic …. $15 $16 Unit sales price–Mod ……. $20 $19 Unit sales–Classic ………… 2,400 2,500 Unit sales–Mod ………….. 2,000 1,900
Haversham Corporation produces dress shirts. The company uses a standard costing system and has set the...
Haversham Corporation produces dress shirts. The company uses a standard costing system and has set the following standards for direct materials and direct labor (for one shirt): Fabric (1.5 yds. @ $2.80) $4.20 Direct labor (1.1 hr. @ $20) 22.00    Total prime cost $26.20 During the year, Haversham produced 9,700 shirts. The actual fabric purchased was 14,450 yards at $2.76 per yard. There were no beginning or ending inventories of fabric. Actual direct labor was 10,790 hours at $19.50 per...
Mcdale Inc. produces and sells two ... Mcdale Inc. produces and sells two products. Data concerning...
Mcdale Inc. produces and sells two ... Mcdale Inc. produces and sells two products. Data concerning those products for the most recent month appear below: Product I49V Product Z50U Sales $ 42,000 $ 47,000 Variable expenses $ 13,000 $ 28,830 The fixed expenses of the entire company were $38,960. The break-even point for the entire company is closest to: Multiple Choice Top of Form $80,790 $73,509 $38,960 $46,080 A cement manufacturer has supplied the following ... A cement manufacturer has...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT