Next Year's Budget for Temper, Inc At the End of the Year, the Total Fixed Costs

question 125

Essay

Next year's budget for Temper, Inc., is given below: $\begin{array}{lcc}&\text { Product A } & \text { Product B }\\\text { Sales }&\$945,000&\$688,500 \\\text { Variable costs } &459,900&297,000\\\text { Fixed costs }& \underline{300,000}& \underline{300,000}\\\text {Net income } & \underline{\$185,100}& \underline{91,500} \\\text {Units}& 126,000&54,000\\\end{array}$

At the end of the year, the total fixed costs and the variable costs per unit were exactly as budgeted, but the following units per product line were sold:
$$\begin{array} { c c c } \text { Product Line } & \text { Units } & \text { Sales } \\1 & 126,200 & \$ 958,579 \\2 & 56,800 & \$ 721,010\end{array}$$
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:

Tacit Knowledge

The knowledge that is difficult to transfer to another person by writing it down or verbalizing it; often gained through personal experience.

Intuition

The ability to understand or know something immediately, without the need for conscious reasoning.

Problem Identification

The initial step in the problem-solving process where the issue is clearly defined and understood before seeking solutions.

Stakeholders

Individuals, groups, or organizations that have an interest or concern in an organization and can be affected by the organization's actions, objectives, and policies.