Winston Co $\text { On September 1, the following actual operating results for August were reported: }$

question 58

Multiple Choice

Winston Co. had two products code named X and Y. The firm had the following budget for August: $\begin{array}{lrrr} & \text { Product X } & \text { Product Y } & \text { Total } \\\text { Sales } & \$ 286,000 & \$ 520,000 & \$ 806,000 \\\text { Variable Costs } & 189,800 & 218,400 & 408,200\\\text { Contribution Margin } & \$ 96,200 & \$ 301,600 & \$ 397,800 \\\text { Fixed costs } & 50,000 & 108,000 & 158,000\\\text { Operating Income }&\$46,200&\$193,600&\$239,800\\\text { Selling Price per unit }&\$110.00&\$50.00\end{array}$

$\text { On September 1, the following actual operating results for August were reported: }$

$\begin{array}{lrrr} & \text { Product X } & \text { Product Y } & \text { Total } \\\text { Sales } & \$ 360,000 & \$ 540,000 & \$ 900,000 \\\text { Variable Costs } & 195,000 & 216,000 & 411,000\\\text { Contribution Margin } & \$ 165,000 & \$ 324,000 & \$ 489,000 \\\text { Fixed costs } & 50,000 & 108,000 & 158,000 \\\text { Operating Income }&\$115,00&\$216,000&\$331,000\\\text { Units Sold }&3,000&9,000\end{array}$ 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 firm's market size variance for the period is:

• A) $16,000 favorable.
• B) $26,000 favorable.
• C) $61,200 favorable.
• D) $30,600 unfavorable.
• E) $91,800 unfavorable.

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Definitions:

Purchases Discount

A reduction in the price paid for goods and services if payment is made within a certain period, often used to encourage early payment.

Cash Discounts

A reduction in the invoice amount by a seller to encourage early payment from the buyer, usually within a specified time frame.

Periodic Inventory

An inventory system where stock levels are checked and updated at regular, specified intervals.

Computerized Accounting Systems

Software applications designed to manage and automate financial transactions and records for businesses.