There are three products: Duck, Cow, and Chicken. The selling price of the Duck, Cow, and Chicken are $25, $33, and $19, respectively. The direct materials costs for the Duck, Cow, and Chicken are 28%, 30%, and 23% of selling price, respectively. The other variable costs, consisting of direct labor and variable overhead costs for the Duck, Cow, and Chicken are 35%, 39%, and 32%, respectively. 

Budgeted fixed manufacturing costs and fixed selling, general, and administrative costs at FYF are $3.5 million and $2.2 million, respectively. The following table summarizes the above information and budgeted sales of each of the three products and budgeted market size for each of the three products.

The following table summarizes the actual results for the past year.

Required 

(a) Compute Farm Yard Friends’: 

(i) Static budget income 

(ii) Flexible budget income 

(iii) Actual income 

(iv) Planning variance 

(v) Flexible budget variance 

(b) Compute each of the following and explain the meaning of each in everyday language. 

(i) The total sales mix variance 

(ii) The total sales quantity variance 

(iii) The market share variance for Farm Yard Friends 

(iv) The market size variance for Farm Yard Friends  

Transcribed Image Text:

Selling price Direct materials cost. Other variable costs Contribution margin. Direct materials cost % of selling price...... Other variable costs % of selling price. Fixed costs. Manufacturing.. SGA.... Static budget sales.. Budget market size in units DUCK $25.00 7.00 8.75 $ 9.25 28.00% 35.00% $3,500,000 $2,200,000 Cow $33.00 9.90 12.87 $10.23 30.00% 39.00% CHICKEN $19.00 4.37 6.08 $ 8.55 23.00% 32.00% 250,000 240,000 340,000 6,000,000 4,500,000 7,600,000