Question

a company sells two products: microwaves and toaster ovens. the expected sales for microwaves were 3,000 units; 4,000 were sold. the budgeted selling price for microwaves was $77.00; however, the actual selling price was $86.00. the expected sales for toaster ovens were 2,500 units; 3,500 were sold. the budgeted selling price for toaster ovens was $109.00; however, the actual selling price was $113.00. budgeted and actual variable costs were $41.00 per unit for the microwaves and $75.00 per unit for the toaster ovens. what is the total sales mix variance for the period?

Answer 1

The total sales mix variance is calculated by taking the difference in actual and expected unit sales, multiplying by the budgeted contribution margin per unit for each product. The total sales mix variance for the period is $70,000 favorable.

Step-by-step explanation:

The total sales mix variance is calculated by comparing the actual sales mix to the budgeted sales mix. It shows the impact of the change in proportion of products sold on the overall profit. The variance for each product is calculated by taking the difference in actual and expected unit sales, multiplying by the budgeted contribution margin per unit, which is the budgeted selling price minus the budgeted variable cost per unit.

For microwaves, the budgeted contribution margin is $77.00 - $41.00 = $36.00 per unit. For toaster ovens, it's $109.00 - $75.00 = $34.00 per unit. Now, let's calculate the variance for each:

• Microwave sales mix variance = (4,000 actual - 3,000 expected) × $36.00 = $36,000 favorable.
• Toaster oven sales mix variance = (3,500 actual - 2,500 expected) × $34.00 = $34,000 favorable.

The total sales mix variance is the sum of individual variances, which is $36,000 + $34,000 = $70,000 favorable.