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

The planned revenue for Kings = 40,000 x $20 = $800,000 
The actual revenue for Kings = 45,000 x $19 = $855,000 
The price variance for Kings = $855,000 - $800,000 = $55,000 unfav

The planned revenue for Kweens = 20,000 x $15 = $300,000 
The actual revenue for Kweens = 25,000 x $16 = $400,000 
The price variance for Kweens = $400,000 - $300,000 = $100,000 unfav

The total price variance = $55,000 unfav + $100,000 unfav = $155,000 unfav. Therefore, option C is correct.

The planned quantity of Kings = 40,000 
The actual quantity of Kings = 45,000 
The quantity variance for Kings = 45,000 - 40,000 = $5,000 unfav

The planned quantity of Kweens = 20,000 
The actual quantity of Kweens = 25,000 
The quantity variance for Kweens = 25,000 - 20,000 = $5,000 unfav

The total quantity variance = $5,000 unfav + $5,000 unfav = $10,000 unfav. Therefore, option D is not correct.

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