Earle Soup Company makes three varieties of soups: Bean, Tomato, and Vegetable. Sales volume for the annual budget is determinedby estimating the total market volume for soups and then applying the company's prior year market share, adjusted for plannedchanges due to company programs for the coming year. Volume is apportioned among the three varieties of soup based on the prioryear's product mix, again adjusted for planned changes for the coming year.The following are the company budget and the results of operations for the most recent quarter.Budget (all units and costs in thousands)Sales-unitsSales-dollarsVariable costsContribution marginManufacturing fixed costProduct marginMarketing and administrative costs (all fixed)Operating profitActual fall units and costs in thousands)Sales-unitsSales-dollarsVariable costsContribution margin:Manufacturing fixed costProduct marginMarketing and administrative costs (all fixed)Operating profit$ 1,200840$360240$ 120Sales mix varianceQuantity varianceBean30 casesBean.24 cases$ 9726725. 300252Tomato$ 2,4001,920$ 480240$ 24030 casesTomato30 cases$ 2,4001.932$468264$ 204Vegetable60 cases$ 3,6002,760$ 840360$ 480Vegetable.63 cases$ 3,6002,784$ 816378$ 438Industry volume for the quarter was estimated at 1.2 million cases for budgeting purposes. Actual industry volume for the quarter was1,140,000 cases.Required:Break down the total activity variance into sales mix and quantity parts.Note: Do not round intermediate calculations. Enter your answers in thousands. Indicate the effect of each variance by selecting"F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.Total120 cases$ 7,2005,520$1,680848$ 840300$548$ 6,9725,388$1,584894$ 6983305368Total117 cases

Sales mix variance = Revised standard sales - Standard sales Standard sales = Actual selling…

Required: Break down the total activity variance into sales mix and quantity parts. Note: Do not round intermediate calculations. Enter your answers in thousands. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Sales mix variance Quantity variance

Required: Break down the total activity variance into sales mix and quantity parts. Note: Do not round intermediate calculations. Enter your answers in thousands. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Sales mix variance Quantity variance

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 1CMA: Taylor Corporation is analyzing the cost behavior of three cost items, A, B, and C, to budget for...

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Taylor Corporation is analyzing the cost behavior of three cost items, A, B, and C, to budget for the upcoming year. Past trends have indicated the following dollars were spent at three different levels of output: In establishing a budget for 14,000 units, Taylor should treat A, B, and C costs as: a. semivariable, fixed, and variable, respectively. b. variable, fixed, and variable, respectively. c. semivariable, semivariable, and semivariable, respectively. d. variable, semivariable, and semivariable, respectively.
Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the annual budget is determined by estimating the total market volume for candy bars and then applying the company's prior year market share, adjusted for planned changes due to company programs for the coming year. Volume is apportioned among the three bars based on the prior year's product mix, again adjusted for planned changes for the coming year. The following are the company budget and the results of operations for July. Budget Chewy Chunky Choco-Lite Total Sales-units (in thousands) 2,000 bars 2,000 bars 4,000 bars 8,000 bars Sales-dollars (in thousands) $ 240 $ 360 $ 720 $ 1,320 Variable costs 180 300 560 1,040 Contribution margin $ 60 $ 60 $ 160 $ 280 Manufacturing fixed cost 40 38 60 138 Product margin $ 20 $ 22 $ 100 $ 142 Marketing and…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 31,000 October 21,000 August 72,000 November 7,500 September 41,000 December 8,000 The selling price of the beach umbrellas is $11 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $231,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of…
Peninsula Candy Company makes three types of candy bars: Chewy, Chunky, and Choco-Lite (Lite). Sales volume for the annual budget is determined by estimating the total market volume for candy bars and then applying the company's prior year market share, adjusted for planned changes due to company programs for the coming year. Volume is apportioned among the three bars based on the prior year's product mix, again adjusted for planned changes for the coming year. The following are the company budget and the results of operations for July. Budget Sales-units (in thousands) Sales-dollars (in thousands) Chewy 2,000 bars $200 Chunky 2,000 bars $400 Choco-Lite Total 8,000 bars $1, 200 4,000 bars $600 Variable costs 140 320 460 920 Contribution margin Manufacturing fixed cost $ 60 $ 80 $140 280 40 40 60 140 Product margin $ 20 $ 40 $ 80 $4 140 Marketing and administrative costs (all fixed) 50 Operating profit $ 90 Actual Sales-units (in thousands) Sales-dollars (in thousands) Variable costs…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: A) The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 30,500 October 20,500 August 71,000 November 7,000 September 40,000 December 7,500 The selling price of the beach umbrellas is $10 per unit. B) All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $200,000. C) The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. D) Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: A) The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 30,500 October 20,500 August 71,000 November 7,000 September 40,000 December 7,500 The selling price of the beach umbrellas is $10 per unit. B) All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $200,000. C) The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. D) Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50%…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 32,000 October August 74,000 November September 43,000 December The selling price of the beach umbrellas is $13 per unit. b. All sales are on account. Based on past experience, sales are collected in the following pattern: 38% in the month of sale 65% in the month following sale 5% uncollectible 22,000 8,500 9,000 Sales for June totaled $299,000. c. The company maintains finished goods Inventories equal to 15% of the following month's sales. This requirement will be met at the end of June. d. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending Inventory of Gilden be equal to 50% of the following month's…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 34,000 October 24, 000 August 78,000 November 10, 500 September 47,000 December 11,000 The selling price of the beach umbrellas is $11 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $297,000. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month's production…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 36,000 October 26,000 August 82,000 November 12,500 September 51,000 December 13,000 The selling price of the beach umbrellas is $15 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $465,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 35,500 October 25,500 August 81,000 November 12,000 September 50,000 December 12,500 The selling price of the beach umbrellas is $14 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $420,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 35,500 October 25,500 August 81,000 November 12,000 September 50,000 December 12,500 The selling price of the beach umbrellas is $14 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $420,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory…
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: The Marketing Department has estimated sales as follows for the remainder of the year (in units): July 35,500 October 25,500 August 81,000 November 12,000 September 50,000 December 12,500 The selling price of the beach umbrellas is $14 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $420,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory…