Page 183 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Management Control Systems

Notes Solution:
Revenue Variances:
Selling Price variance = Actual volume (Diff. in actual price and standard price)
Product A = 100,000 (1.00 – 0.90) = (10,000) unfavourable

Product B = 200,000 (2.00 – 2.05) = 10,000 Favourable
Product C = 150,000 (3.00 – 2.50) = (75,000) Unfavourable
(75,000) favourable

Sales Mix Variance, Jan (` 000)

Product Budgeted Budgeted Actual Difference Unit Variance
proportion Mix at sales contri-
actual bution
volume
(1) (2) (3) (4) (5) = (3) – (4) (6) (7) = (5) x (6)
A 1/3 150 100 (50) ` 0.20 ` (10)
B 1/3 150 200 50 ` 0.90 ` 45
C 1/3 150 150 - ` 35
450 450 35

Sales Volume Variance, January (` 000)

Product Budgeted Mix Budgeted Difference Unit Volume
at Actual Volume Contribution Variance
Volume
(1) (2) (3) (4) (5) (6)
A 150 100 50 ` 0.20 ` 10
B 150 100 50 ` 0.90 ` 45
C 150 100 50 ` 1.20 ` 60
450 300 150 ` 115

Sales Volume Variance, January (` 000)

Actual ` Budget ` Favourable or unfavourable variances
Fixed overhead 75 75 ` –
Selling expenses 55 50 (5)
Admin. Expenses 30 25 (5)

Variable Manufacturing Expenses Variances, January (` ‘000)
Product
A B C Total Actual Favourable /
unfavourable
variance
Material ` 75 ` 84 ` 300 ` 459 ` 470 ` (11)
Labour 15 18 20 53 65 (12)
Overhead (Variable) 30 30 40 100 90 10
120 132 360 612 625 (13)

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