Special Tea Products (STP) has an exclusive contract with Tea Distributors. Two brands of Teas are...

• 
  

Transcribed Image Text:

Special Tea Products (STP) has an exclusive contract with Tea Distributors. Two brands of Teas are imported, Strong and Mild, and sold to retail outlets. The monthly budget for the contract is based on a combination of last year's performance, a forecast of general industry sales, and the company's expected share of the Canadian market for imported Tea. The following information is provided for the month of May: Budgeted Budgeted Strong Actual Actual Mild Strong Mild Price per kg $2.00 $3.00 $2.50 $2.50 Variable cost /kg 1.00 1.50 1.00 2.00 Cont. margin $1.00 $1.50 $1.50 $0.50 Sales (in kg) 2,000 1,500 1,700 1,800 Budgeted fixed costs are $1,750. Actual fixed costs are $2,000. YOU ARE REQUIRED TO DO THE FOLLOWING:- 1. Prepare the original Fixed budget Tictual Strong Mild Strong Mild Price per kg $2.00 $3.00 $2.50 $2.50 Variable cost/kg 1.00 1.50 1.00 2.00 Cont. margin $1.00 $1.50 $1.50 $0.50 Sales (in kg) 2,000 1,500 1,700 1,800 Budgeted fixed costs are $1,750. Actual fixed costs are $2,000. YOU ARE REQUIRED TO DO THE FOLLOWING:- 1. Prepare the original Fixed budget 2. Prepare a Flexed budget 3. Prepare a tabular comparative analysis using the three tables for original and flexed budget along with the Actual Results 4. Identify ALL variances 5. Analyze the Sales Contribution margin variances and give your comments. (Ctrl) Special Tea Products (STP) has an exclusive contract with Tea Distributors. Two brands of Teas are imported, Strong and Mild, and sold to retail outlets. The monthly budget for the contract is based on a combination of last year's performance, a forecast of general industry sales, and the company's expected share of the Canadian market for imported Tea. The following information is provided for the month of May: Budgeted Budgeted Strong Actual Actual Mild Strong Mild Price per kg $2.00 $3.00 $2.50 $2.50 Variable cost /kg 1.00 1.50 1.00 2.00 Cont. margin $1.00 $1.50 $1.50 $0.50 Sales (in kg) 2,000 1,500 1,700 1,800 Budgeted fixed costs are $1,750. Actual fixed costs are $2,000. YOU ARE REQUIRED TO DO THE FOLLOWING:- 1. Prepare the original Fixed budget Tictual Strong Mild Strong Mild Price per kg $2.00 $3.00 $2.50 $2.50 Variable cost/kg 1.00 1.50 1.00 2.00 Cont. margin $1.00 $1.50 $1.50 $0.50 Sales (in kg) 2,000 1,500 1,700 1,800 Budgeted fixed costs are $1,750. Actual fixed costs are $2,000. YOU ARE REQUIRED TO DO THE FOLLOWING:- 1. Prepare the original Fixed budget 2. Prepare a Flexed budget 3. Prepare a tabular comparative analysis using the three tables for original and flexed budget along with the Actual Results 4. Identify ALL variances 5. Analyze the Sales Contribution margin variances and give your comments. (Ctrl)