Assignment
COST ALLOCATION, CUSTOMER-PROFITABILITY ANALYSIS, AND SALESVARIANCE ANALYSIS
1.
The Omega Corporation manufactures two types of vacuum cleaners, the ZENITH for
commercial building use and the House-Helper for residences. Budgeted and actual
operating data for the year 20x3 are as follows:
Static Budget
Number sold
Contribution margin
ZENITH
15,000
$3,750,000
House-Helper
60,000
$12,000,000
Total
75,000
$15,750,000
Actual Results
Number sold
Contribution margin
ZENITH
16,500
$6,200,000
House-Helper
38,500
$10,200,000
Total
55,000
$16,400,000
Prior to the beginning of the year, a consulting firm estimated the total volume for
vacuum cleaners of the Zenith and House-Helper category to be 300,000 units, but
actual industry volume was only 275,000 units.
Required:
a.
Compute the sales-mix variance and the sales-quantity variance by type of
vacuum cleaner, and in total. (In terms of the contribution margin.)
b.
Compute the market-share variance and market-size variance in terms of the
contribution margin.
2.
The Chair Company manufactures two modular types of chairs, one for the residential
market, and the other for the office market. Budgeted and actual operating data for the
year 20x3 are:
Static Budget
Number of chairs sold
Contribution margin
Residential
260,000
$26,000,000
Office
140,000
$11,200,000
Total
400,000
$37,200,000
Actual Results
Number of chairs sold
Contribution margin
Residential
248,400
$22,356,000
Office
165,600
$13,248,000
Total
414,000
$35,604,000
Prior to the beginning of the year, an office products research firm estimated the
industry volume for residential and office chairs of the type sold by the Chair
Company to be 2,400,000. Actual industry volume for the year 20x3 was only
2,200,000 chairs.
Required:
Compute the following variances in terms of contribution margin.
a.
Compute the total sales-volume variance, Compute the sale-mix variance and
the sales-quantity variance by type of chair, and in total.
c.
Compute the market-share variance and market-size variance.
3.
Speedy Printing manufactures soft cover books. For January, the following
information is available:
Budgeted market size (units)
Budgeted market share
Budgeted average contribution margin per unit
Actual market size (units)
Actual market share
Actual average contribution margin per unit
125,000
18%
$1.20
100,000
19%
$1.22
Required:
Compute the market-share variance, the market-size variance, and the sales-quantity
variance in terms of the contribution margin.