Sales Mix and Quantity Variances
Renee’s Rings manufactures college rings. Two models are produced: The Spirit model with a budgeted price of $500 and a standard variable cost of $200. The Chancellor model has a budgeted price of $1,200 and a standard variable cost of $400. At the beginning of the year, Renee estimated that she would sell 2,000 Chancellor rings and 8,000 Spirit rings. The actual results for the year showed that 2,400 Chancellor rings were sold for total revenues of $2,520,000. A total of 8,800 Spirit rings were sold for revenues of $4,620,000.
Required
a. Compute the activity variance for Renee’s Rings for the year.
b. Compute the mix and quantity variances for the year.