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14-23 (Cont’d.)

Solution Exhibit 14-23 displays the following sales-quantity, sales-mix, and sales-volume variances:

Sales-Volume Variance

Plain$1,400 U

Chic  1,200 F

All Glasses$   200 U

Sales-Mix VariancesSales-Quantity Variances

Plain$   600 UPlain$   800 U

Chic  1,800 FChic     600 U

All Glasses$1,200 FAll Glasses$1,400 U

3.Jinwa Corporation shows an unfavorable sales-quantity variance because it sold fewer wine glasses in total than was budgeted.  This unfavorable sales-quantity variance is partially offset by a favorable sales-mix variance because the actual mix of wine glasses sold has shifted in favor of the higher contribution margin Chic wine glasses.  The problem illustrates how failure to achieve the budgeted market penetration can have negative effects on operating income.

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