Epesi, Inc. has two independent divisions: the Water Division manufactures bottled purified water and the Pop Division manufactures bottled soda drinks. It has no defective products.
Looking into the sales variances for the year of 2020, Epesi found that, for Epesi as a whole, the static- budget total contribution margin is $3,060,000, total budgeted units sold are 400,000 units, total sales quantity variance is $1,530,000 (F).
For the Water Division, the budgeted contribution margin per unit is $6 and actual sales-mix is 40%.
For the Pop Division, the budgeted contribution margin per unit is $9.
Required:
Compute the sales quantity variance and the sales mix variance for the Pop Division and explain what insights these 2 variances suggest about Pop Division’s actual sales performance in the year of 2020.