Question

In: Accounting

Pricing Strategy, Sales Variances Eastman, Inc., manufactures and sells three products: R, S, and T. In...

Pricing Strategy, Sales Variances

Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following.

Budgeted
Volume
Budgeted
Price
Product R 111,300        $29       
Product S 145,100        23       
Product T 16,200        19       

At the end of the year, actual sales revenue for Product R and Product S was $3,069,900 and $3,480,400, respectively. The actual price charged for Product R was $27 and for Product S was $22. Only $8 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $343,200 for this product.

Required:

1. Calculate the sales price and sales volume variances for each of the three products based on the original budget.

Sales price variance Sales volume variance
Product R $ Unfavorable $ Favorable
Product S $ Unfavorable $ Favorable
Product T $ Unfavorable $ Favorable

Solutions

Expert Solution

Basic Data
Product Budgeted Price per Unit (A) Budgeted Total Volume(B) Budgeted Total Revenue (C=AxB) Actual Price per Unit (D) Actual Total Revenue (E) Actual Quantity (F=E/D)
Product R $              29.00              111,300 $ 3,227,700.00 $        27.00 $ 3,069,900.00 113,700
Product S $              23.00              145,100 $ 3,337,300.00 $        22.00 $ 3,480,400.00 158,200
Product T $              19.00                 16,200 $      307,800.00 $          8.00 $      343,200.00 42,900
Total              272,600            6,872,800            6,893,500    314,800
Product Sales Price Variance Sales Volume Variance
Product R $ (227,400.00) Unfavourable $        69,600.00 Favourable
Product S $ (158,200.00) Unfavourable $      301,300.00 Favourable
Product T $ (471,900.00) Unfavourable $      507,300.00 Favourable
Total $ (857,500.00) $      878,200.00

Sales Price Variance = (Actual Price per unit - Budgeted Price per unit) x Actual Quantity Sold = (D-A)xF

Sales Volume Variance = (Actual Quantity sold - Budgeted Quantity sold) x Budgeted Price = (F-B)xA


Related Solutions

Pricing Strategy, Sales Variances Eastman, Inc., manufactures and sells three products: R, S, and T. In...
Pricing Strategy, Sales Variances Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following. Budgeted Volume Budgeted Price Product R 112,400        $24        Product S 165,800        20        Product T 15,700        19        At the end of the year, actual sales revenue for Product R and Product S was $2,519,000 and $3,234,600, respectively. The actual price charged for Product R was $22 and for Product S was $18. Only $8 was charged for...
Variable and Absorption Costing—Three Products Shoes R' Us, Inc. manufactures and sells three types of shoes....
Variable and Absorption Costing—Three Products Shoes R' Us, Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing method for the three shoes are as follows: Shoes R' Us, Inc. Product Income Statements—Absorption Costing For the Year Ended December 31, 2016 Athletic Shoes Casual Shoes Work Shoes Revenues $405,200 $239,100 $198,500 Cost of goods sold 210,700 117,200 133,000 Gross profit $194,500 $121,900 $65,500 Selling and administrative expenses 167,300 87,800 109,400 Income from operations $27,200...
The marketing and pricing strategy of market segmentation and pricing products/services based on a strategy of...
The marketing and pricing strategy of market segmentation and pricing products/services based on a strategy of Good , Better and Best for delivering value to customers.   In light of all your learning this week, step back and assess the implications of this strategy and whether the approach can assist in delivering enhanced "value Exchange", Smith, T. J. (2011). How does price discrimination (direct indirect) fit into the implementation of this strategy. Discuss the challenges and risks to implementing this strategy.
Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and...
Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $318,000, and the sales mix is 60% bats and 40% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $60 $50 Gloves 150 90 a. Compute the break-even sales (units) for the overall enterprise product, E. units b. How many units of each...
Sales mix and break-even sales Dragon Sports Inc. manufactures and sells two products, baseball bats and...
Sales mix and break-even sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $141,000, and the sales mix is 80% bats and 20% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $60 $60 Gloves 100 50 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and...
Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and...
Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $305,800, and the sales mix is 60% bats and 40% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $40 $30 Gloves 100 60 a. Compute the break-even sales (units) for the overall enterprise product, E. units b. How many units of each...
Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and...
Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $510,000, and the sales mix is 20% bats and 80% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $70 $50 Gloves 180 110 a. Compute the break-even sales (units) for the overall enterprise product, E. units b. How many units of each...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $46; white, $76; and blue, $101. The per unit variable costs to manufacture and sell these products are red, $31; white, $51; and blue, $71. Their sales mix is reflected in a ratio of 2:2:1 (red:white:blue). Annual fixed costs shared by all three products are $141,000. One type of raw material has been used to manufacture all three products. The company has developed...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $47; white, $77; and blue, $102. The per unit variable costs to manufacture and sell these products are red, $32; white, $52; and blue, $72. Their sales mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed costs shared by all three products are $142,000. One type of raw material has been used to manufacture all three products. The company has developed...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are...
National Co. manufactures and sells three products: red, white, and blue. Their unit sales prices are red, $53; white, $83; and blue, $108. The per unit variable costs to manufacture and sell these products are red, $38; white, $58; and blue, $78. Their sales mix is reflected in a ratio of 5:4:2 (red:white:blue). Annual fixed costs shared by all three products are $148,000. One type of raw material has been used to manufacture all three products. The company has developed...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT