The Hiro Corporation sells two brands of wine glasses: Plain and Chic. Hiro provides the following information
Question:
The Hiro Corporation sells two brands of wine glasses: Plain and Chic. Hiro provides the following information for sales in the month of June 2014:
Static-budget total contribution margin .......$ 15,525
Budgeted units to be sold of all glasses .......2,300 units
Budgeted contribution margin per unit of Plain....$ 5 per unit
Budgeted contribution margin per unit of Chic......$ 12 per unit
Total sales-quantity variance............$ 2,700 U
Actual sales-mix percentage of Plain...........60%
All variances are to be computed in contribution-margin terms.
Required
1. Calculate the sales-quantity variances for each product for June 2014.
2. Calculate the individual-product and total sales-mix variances for June 2014. Calculate the individual-product and total sales-volume variances for June 2014.
3. Briefly describe the conclusions you can draw from the variances.
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes... Corporation
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Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan