MPLC produces jam and jelly of different flavors. The company wants to calculate the following variances based on the information provided.
Standard Actual
Sales(units) $900 $1000
Sales price per unit $15 %12
Variable cost of sales per unit$110 $9
Margin per unit $5 $3
Total fixed cost $900 $800
To calculate the variances for the given information, we need to calculate the following variances:
1. Sales Volume Variance:
Sales Volume Variance = (Actual Sales - Standard Sales) x Standard Sales Price per unit
From the given information, we have:
Actual Sales = $1000 units
Standard Sales = $900 units
Standard Sales Price per unit = $15
Substituting the values into the formula, we get:
Sales Volume Variance = ($1000 - $900) x $15 = $1500
2. Sales Price Variance:
Sales Price Variance = (Actual Sales - Standard Sales) x (Actual Sales Price per unit - Standard Sales Price per unit)
Using the given information, we have:
Actual Sales = $1000 units
Standard Sales = $900 units
Actual Sales Price per unit = $12
Standard Sales Price per unit = $15
Substituting the values into the formula, we get:
Sales Price Variance = ($1000 - $900) x ($12 - $15) = -$300
Note: A negative value indicates a decrease in revenue due to a lower sales price compared to the standard price.
3. Variable Cost Variance:
Variable Cost Variance = (Actual Sales - Standard Sales) x (Standard Variable Cost of Sales per unit - Actual Variable Cost of Sales per unit)
Using the given information, we have:
Actual Sales = $1000 units
Standard Sales = $900 units
Standard Variable Cost of Sales per unit = $11
Actual Variable Cost of Sales per unit = $9
Substituting the values into the formula, we get:
Variable Cost Variance = ($1000 - $900) x ($11 - $9) = $200
4. Contribution Margin Variance:
Contribution Margin Variance = (Actual Sales - Standard Sales) x (Standard Margin per unit - Actual Margin per unit)
Using the given information, we have:
Actual Sales = $1000 units
Standard Sales = $900 units
Standard Margin per unit = $5
Actual Margin per unit = $3
Substituting the values into the formula, we get:
Contribution Margin Variance = ($1000 - $900) x ($5 - $3) = $200
5. Fixed Cost Variance:
Fixed Cost Variance = Actual Fixed Cost - Standard Fixed Cost
Using the given information, we have:
Actual Fixed Cost = $800
Standard Fixed Cost = $900
Substituting the values into the formula, we get:
Fixed Cost Variance = $800 - $900 = -$100
Note: A negative value indicates lower actual fixed costs compared to the standard fixed costs.
These are the variances that MPLC can calculate based on the provided information.