129. The Tempest Company has the following information for the current year.
Actual Budget
Sales Units
Product X 22,000 20,000
Product Y 33,000 30,000
Total 55,000 50,000
Sales Mix for each Product
Product X 40.0% 40.0%
Product Y 60.0% 60.0%
Price
Product X $22.00 $20.00
Product Y $35.00 $30.00
Variable Cost per Unit
Product X $15.00 $14.00
Product Y $16.00 $18.00
The industry budget is 2 million units and the actual result for the industry is 2.5 million units.
Required:
1. Compute the contribution margin sales mix variance for product X.
2. Compute the contribution margin sales mix variance for product Y.
3. Compute the contribution margin sales volume variance for product X.
4. Compute the contribution margin sales volume variance for product Y.
5. Compute the contribution margin sales quantity variance for product X.
6. Compute the contribution margin sales quantity variance for product Y.
7. Compute the market share variance for Tempest.
8. Computer the market size variance for Tempest.
130. Taylor, Inc., has the following information for the two most recent years of operations.
2016 2015
Sales Units 33,000 40,000
Price $30.00 $33.00
Materials cost per pound $15.00 $18.00
Pounds of material required per unit 0.75 1.00
Labor hours required per unit 1.80 2.00
Wage rate per hour $9.00 $10.00
Contribution margin $2.55 ($5.00)
Required:
Determine the following:
1. Selling price variance in sales dollars.
2. Sales volume variance in contribution.
3. Materials usage variance.
4. Materials price variance.
5. Labor usage variance.
6. Labor rate variance.
131. In early 2006, the new CEO of Hewlett-Packard (H-P), Mark Hurd, became aware of a
number of customer complaints about the accessibility of sales support at the company. The
complaints referred to a confusing management structure and lack of contact with sales support
personnel from H-P. There were 17,000 people working in H-P sales, and customers, particularly
the large corporate customers, were frustrated dealing with the complexity of the H-P sales
system.
Required:
What would you propose to Mark Hurd, the CEO at H-P, regarding an overhaul of the sales
support systems at H-P?
Points for CEO Hurd to consider:
ο is H-P measuring the key drivers of sales performance?
132. Triple Delight is a food stand located on a busy corner in the local business district. On
average it sells three cheeseburgers and one fishwich for every four hamburgers sold. The
following data were culled from its operation for 2016:
Total operating income variance
Hamburger $18,000 Unfavorable
Cheeseburger 50,000 Favorable
Fishwich 10,000 Unfavorable
Sales quantity variance
Hamburger 14,000 Favorable
Cheeseburger 15,000 Favorable
Fishwich 1,000 Favorable
Sales mix variance
Hamburger 2,240 Unfavorable
Cheeseburger 4,800 Unfavorable
Fishwich 1,600 Favorable
Fixed costs variances 0
Market share variance $96,000 Unfavorable
Market share variance 126,000 Favorable
Change in market share 4%
Fixed cost flexible budget variance 0
The estimated total volume for the food stands in the region was 2,500,000 units. Consistent
good weather pushed the total volume for the year to 4,000,000.
Required:
Determine the following:
1. Budgeted weighted-average contribution margin.
2. Budgeted and actual market shares.
3. Budget and actual total units sold.
4. Sales quantity variances for fishwich.
5. Budgeted contribution margin of each product.
6. Actual sales mix of each product.
7. Budget and actual units sold for each product.
133. Lau & Lau, Ltd. of Hong Kong manufacture two products for the same market. Its budget
and operating results for the year just completed follow:
Budget Actual
Unit of sales
Product A 30,000 35,000
Product B 60,000 65,000
Contribution margin per unit
Product A $4.00 $3.00
Product B 10.00 12.00
Selling price per unit
Product A $10.00 $12.00
Product B 25.00 24.00
At the time of budget preparation, the budgeting department and sales department agreed that
the industry volume for the year would likely be 1,500,000 units. Actual industry volume turned
out to be 2,000,000 units.
Required:
(you may round fractions to three decimal places)
1. What is the average budgeted contribution margin per unit?
2. What is the sales volume contribution margin variance for each product?
3. What is the sales mix contribution margin variance for each product?
4. What is the sales quantity contribution margin variance for each product?
5. What is the market size contribution margin variance?
6. What is the market share contribution margin variance?
7. What is the total flexible budget contribution margin variance?
8. What is the total variable cost price variance if the total contribution margin price variance is
$50,000 favorable?
9. What is the total variable cost efficiency variance if the total contribution margin price
variance is $50,000 favorable?
1.
134. Showtime is a group of aspiring musicians and actors who perform in theaters and dinner
clubs. It has a matinee and evening show. These operating data pertain to the month of July:
Master budget data
Total number of shows 100 (evening 70; matinee 30)
Contribution margin per show:
Matinee $240
Evening $600
Actual operating results
Number of shows 90 (36 evening, 54 matinee)
Required:
1. Calculate each variance by individual type of show and also show the combined total of each
variance for both types of shows:
a. Sales mix variances.
b. Sales quantity variances.
c. Sales volume variances.
2. What strategic implications can you draw from the variances?
1.
