Estimating Flexible Selling Expense Budget and Computing Variances

question 72

Essay

Estimating flexible selling expense budget and computing variances.Georgia Peaches estimates the following selling expenses next period:

Required:
a.Derive the cost equation (y = a + bx)for selling expenses.(Hint: y = a + bx + cy. )
b.Assume that Georgia actually sells 50,000 units during the period at an average price of $6 per unit.The company had budgeted sales for the period to be: volume,65,000 units;price,$5.50.Calculate the sales price and volume variance.
c.The actual selling expenses incurred during the period were $80,000 fixed and $30,000 variable.Prepare a profit variance analysis for sales revenue and selling expenses.

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Definitions:

Market Segmentation

The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors who might require separate products or marketing mixes.

Operational Excellence

The strategic implementation of consistent and reliable practices and processes that ensure superior performance and competitive advantage.

Value-based Promotions

Marketing strategies focused on providing customers with offers that go beyond traditional discounts, emphasizing the product or service's intrinsic value.

Place Value Creation

The development of benefits and values for consumers through the strategic location and distribution of products.