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14-24 (60 min.) Variance analysis, multiple products.

### 1. Budget for 2003

VariableContrib.

Selling    CostMargin UnitsSalesContribution

Priceper Unitper Unit  SoldMix     Margin

(1)(2)(3) = (1) – (2)    (4) (5)(6) = (3) × (4)

## Limor  4.00  2.80  1.20600,000  24     720,000

Orlem  7.00  4.50  2.501,500,000  60  3,750,000

Total2,500,000100%\$5,270,000

### Selling  CostMargin  UnitsSalesContribution

Priceper Unitper Unit  SoldMix     Margin

(1)(2)(3) = (1) – (2)    (4) (5)(6) = (3) × (4)

## Kola\$6.20\$4.50\$1.70480,000  16%\$   816,000

#### Limor4.252.75  1.50900,000  30  1,350,000

Orlem6.804.60  2.201,620,000 54 3,564,000

Total3,000,000100%\$5,730,000

Solution Exhibit 14-24 presents the sales-volume, sales-quantity, and sales-mix variances for each product and in total for 2003.

Sales-volume

variance

Actual sales     Budgeted salesBudgeted

#### =   quantity  –     quantity×contrib. margin

in unitsin unitsper unit

## Kola=(   480,000 –    400,000) × \$2.00= \$160,000 F

Limor=(   900,000 –    600,000) × \$1.20=  360,000 F

Orlem=(1,620,000 – 1,500,000) × \$2.50=  300,000 F

Total\$820,000 F

## Actual unitsBudgeted unitsBudgetedBudgeted

Sales-quantity

variance

sold  soldpercentage  per unit

###### Kola=(3,000,000 – 2,500,000) × 0.16 × \$2.00=\$   160,000 F

Limor=(3,000,000 – 2,500,000) × 0.24 × \$1.20=     144,000 F

Orlem=(3,000,000 – 2,500,000) × 0.60 × \$2.50=     750,000 F

Total\$1,054,000 F

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