Question

Winston Co. had two products code named X and Y. The firm had the following budget for August:

Product X Product Y Total
Sales $286,000 520,000 $806,000
Variable Costs 189,800 218,400 408,200
Contribution Margin $96,200 $301,600 $397,800
Fixed Costs 50,000 108,000 158,000
Operating Income$ 46,200 $193,600 $239,800
Selling Price per unit$ 110.00 $50.00
On September 1, the following actual operating results for August were reported:
Product X Product Y Total
Sales $360,000 $540,000 $900,000
Variable Costs 195,000 216,000 411,000
Contribution Margin $165,000 $324,000 $489,000
Fixed Costs 50,000 108,000 158,000
Operating Income $115,000 $216,000 $331,000
Units Sold 3,000 9,000
Total industry volume for both products X and Y was estimated to be 130,000 units at the time of the budget. Actual industry volume for the period for products X and Y was 100,000 units.
The selling price variance for Product Y is:____________.
a. $90,000 favorable.
b. $43,200 unfavorable.
c. $90,000 unfavorable.
d. $35,000 favorable.
e. $50,000 unfavorable.

Answer 1

a. $90,000 favorable

Step-by-step explanation:

Calculation for what The selling price variance for Product Y is

First step is to calculate the Actual price

Actual price:M=$540,000 ÷ 9,000

Actual price= $60

Now let calculate the selling price variance

Selling price variance=($60 - $50) × 9,000

Selling price variance=$10×9,000

Selling price variance=$90,000 favorable

Therefore The selling price variance for Product Y is $90,000 favorable