Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following. At the end of the year, actual sales revenue for Product R and Product S was $3,075,000 and $3,254,000, respectively. The actual price charged for Product R was $25 and for Product S was $20. Only $10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $540,000 for this product. Required: 1. Calculate the sales price and sales volume variances for each of the three products based on the original budget. 2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product?

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
BuyFind

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

Solutions

Chapter 18, Problem 20E
Textbook Problem

Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following.

Chapter 18, Problem 20E, Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc.,

At the end of the year, actual sales revenue for Product R and Product S was $3,075,000 and $3,254,000, respectively. The actual price charged for Product R was $25 and for Product S was $20. Only $10 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $540,000 for this product.

Required:

  1. 1. Calculate the sales price and sales volume variances for each of the three products based on the original budget.
  2. 2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product?

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Chapter 18 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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