Virginia Enterprises Produces Two Products, Standard and Deluxe Required:
(Be Sure to Indicate Whether the Variance Is Favorable

question 127

Essay

Virginia Enterprises produces two products, Standard and Deluxe. Actual and budgeted information for the year is provided below: $$\begin{array} { l r r l l l } &{ \text { Standard } } & & { \text { Deluxe } } \\ & \text { Budget } & \text { Actual } & \text { Budget } & \text { Actual } \\\text { Unit sales } & 4,000 & 5,600 & 12,000 & 11,200 \\\text { Sales } & \$ 6,000 & \$ 7,560 & \$ 12,000 & \$ 11,760 \\\text { Variable costs } & 2,400 & 2,800 & \$ 6,000 & 5,800\end{array}$$
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the sales activity variance for each product.
b. Compute the sales mix variance for each product.
c. Compute the sales quantity variance for each product.

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Definitions:

Conversion Premium

The additional cost over the current market value to convert a convertible security into the underlying stock.

Issuance

The process of offering new securities for sale to the public or private investors by a company or government entity.

Continuously Compounded

A method of calculating interest where earnings are immediately reinvested, leading to exponential growth of the investment over time.

Risk-free Rate

The theoretical return on investment of an absolutely risk-free asset, often represented by the yield on government securities.