Acme Manufacturing, manufactures two types of toys – Product A and Product B. The actual operating income for the year was $4,600 below the budgeted operating income. You have been asked to analyze the sales volume variances based on the following information:

Budget	Budget	Budget	Actual	Actual	Actual
Product A	Product B	Total	Product A	Product B	Total
Unit selling price	$20.00	$30.00	$21.00	$32.00
Variable costs:
Manufacturing	$11.00	$17.00	$12.00	$20.00
Marketing	$1.00	$1.00	$1.10	$1.10
Fixed costs:
Manufacturing	$34,500	$36,000
Marketing	$40,000	$44,000
Sales volume (units)	9,000	6,500	10,000	7,000
Industry sales volume (units)	72,500	64,000

Required:

1. Calculate the following variances for each product (16 marks):
   1. Sales-volume variance
   2. Flexible-budget variance
   3. Sales-quantity variance
   4. Sales-mix variance
2. Calculate market-size and market-share variances. (4 marks)
3. Based upon your results in parts 1 and 2, provide two observations about the company’s actual performance compared to the budgeted expectations. (5 marks)

Answer rating: 100% (QA)

Variance a Sales Volume Variance Calculation 100009000 20 Product A Answer Comm... View the full answer