1. Georgiou operates a marginal costing system. The business makes three different types of felt hat, which are of varying quality. Details are as follows: Monthly budget Sales volume Selling price per item Variable cost per item Actual results for November Sales volume Total sales revenue Variable cost per item Deluxe 800 £22.50 £12.00 675 £16,200 £12.00 Standard 1,600 £12.00 £4.50 1,950 £23,400 £4.50 Basic 400 £7.50 £3.00 525 £3,675 £4.00 Required (a) Calculate the sales volume and the sales price variances in November for each of the three products individually. (b) Calculate the sales mix and sales quantity variances and comment on each. (c) It is now discovered, in hindsight, that the average market price of a deluxe model was actually £25 in November. Split the sales price variance for the deluxe model into operating and planning parts and comment on your results.

1. Georgiou operates a marginal costing system. The business makes three different types of felt hat, which are of varying quality. Details are as follows: Monthly budget Sales volume Selling price per item Variable cost per item Actual results for November Sales volume Total sales revenue Variable cost per item Deluxe 800 £22.50 £12.00 675 £16,200 £12.00 Standard 1,600 £12.00 £4.50 1,950 £23,400 £4.50 Basic 400 £7.50 £3.00 525 £3,675 £4.00 Required (a) Calculate the sales volume and the sales price variances in November for each of the three products individually. (b) Calculate the sales mix and sales quantity variances and comment on each. (c) It is now discovered, in hindsight, that the average market price of a deluxe model was actually £25 in November. Split the sales price variance for the deluxe model into operating and planning parts and comment on your results.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 1PB: When prices are falling (deflation), which costing method would produce the highest gross margin for...

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