Karpoff Kremes (KK)planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK?

Question

Quizplus · Accepted Answer

To calculate the price variance, we need to find the difference between the actual revenue and the budgeted revenue for each product.

For Kings: 
Budgeted revenue = 40,000 x $20 = $800,000 
Actual revenue = 45,000 x $19 = $855,000 
Price variance = $855,000 - $800,000 = $55,000 unfavorable

For Kweens: 
Budgeted revenue = 20,000 x $15 = $300,000 
Actual revenue = 25,000 x $16 = $400,000 
Price variance = $400,000 - $300,000 = $100,000 favorable

Therefore, the total price variance for KK is $55,000 - $100,000 = $20,000 unfavorable.

To calculate the quantity variance, we need to find the difference between the actual quantity sold and the budgeted quantity for each product.

For Kings: 
Budgeted quantity = 40,000 
Actual quantity = 45,000 
Quantity variance = 45,000 - 40,000 = $5,000 favorable

For Kweens: 
Budgeted quantity = 20,000 
Actual quantity = 25,000 
Quantity variance = 25,000 - 20,000 = $5,000 favorable

Therefore, the total quantity variance for KK is $5,000 + $5,000 = $10,000 favorable.

None of the given choices are correct.

Karpoff Kremes (KK)planned to Sell 40,000 Kings at $20 Each