Spring 2000 Final Exam question
Use the materials for Question III in the Supplemental Materials to answer this question. The materials in this
question are based on the Midwest Ice Cream case.
____________ 1. Compute the breakeven point for the company using the projected income statement.
____________ 2. Compute the breakeven point for the company using the actual income statement.
3. Why do the two breakeven points differ? What factor made the biggest difference in the breakeven points?
____________ 4. Compute the mix variance for the company.
5. Explain what caused the mix variance. Be specific in your answer.
____________ 6. Compute the volume variance for the company.
7. Shown below are two schedules of sales for ice cream products. What would you tell management about the
profitability of these products based on the data in these two schedules?
Vanilla
Chocolate
Walnut
Buttercrunch
Cherry Swirl
Strawberry
Pecan Chip
Total
Vanilla
Chocolate
Walnut
Buttercrunch
Cherry Swirl
Strawberry
$
$
$
Pecan Chip
Total
$
Margin
Sales
Var. Cost
Margin
Percentage
3,405,380 $ 2,473,680 $
931,700
27.36%
3,030,300
2,184,975
845,325
27.90%
41,908
27,845
14,063
33.56%
439,587
310,770
128,817
29.30%
504,644
363,160
141,484
28.04%
1,401,975
1,043,625
358,350
25.56%
397,180
286,020
111,160
27.99%
9,220,974 $
6,690,075 $
Sales
Var. Cost
3,405,380 $ 2,473,680 $
3,030,300
2,184,975
41,908
27,845
439,587
310,770
504,644
363,160
1,401,975
1,043,625
2,530,899
27.45%
Margin
Fixed Costs
931,700 $
775,547 $
845,325
690,126
14,063
9,544
128,817
100,112
141,484
114,928
358,350
319,288
Profit
Profit
Percentage
156,153
4.59%
155,199
5.12%
4,518
10.78%
28,705
6.53%
26,556
5.26%
39,062
2.79%
397,180
286,020
111,160
90,454
20,706
5.21%
9,220,974 $
6,690,075 $
2,686,901 $
2,100,000 $
586,901
6.36%
Question III supplemental materials
An accountant working for you compiled the following data on an ice cream manufacturer and distributor.
Budgeted Contribution Margin at Forecasted Volume
Standard Contribution
Margin/Gallon
Vanilla
Chocolate
Walnut
Buttercrunch
Cherry Swirl
Strawberry
Pecan Chip
Total
Forecasted
Forecasted
Gallon Sales Contribution Margin
0.4235
0.4335
0.5625
0.4771
0.5053
0.4778
0.5558
2,400,100
2,000,000
40,000
261,500
201,000
630,000
160,000
$1,016,442
867,000
22,500
124,762
101,565
301,014
88,928
0.4431
5,692,600
$2,522,211
Budgeted Contribution Margin at Actual Volume
Standard Contribution
Margin/Gallon
Vanilla
Chocolate
Walnut
Buttercrunch
Cherry Swirl
Strawberry
Pecan Chip
Total
Actual
Flexible Budget
Gallon Sales Contribution Margin
0.4235
0.4335
0.5625
0.4771
0.5053
0.4778
0.5558
2,200,000
1,950,000
25,000
270,000
280,000
750,000
200,000
$931,700
845,325
14,063
128,817
141,484
358,350
111,160
0.4460
5,675,000
$2,530,899
Difference in Gallons Sold
Vanilla
Chocolate
Walnut
Buttercrunch
Cherry Swirl
Strawberry
Pecan Chip
(200,100)
(50,000)
(15,000)
8,500
79,000
120,000
40,000
Projected Income Statement
Sales
$ 8,461,000
Variable Costs
Contribution Margin
5,938,789
2,522,211
Fixed Costs
2,000,000
Projected Profit
$
522,211
Income Statement for Actual Results
Sales
Variable Costs
Contribution Margin
$ 8,665,625
5,756,625
2,909,000
Fixed Costs
Actual Profit
2,100,000
$ 809,000
Actual units sold x target selling price
$ 8,465,625
Mgt413a Fall 97
Question IV
Use the material in the supplemental materials for this exam to answer this question.
_______________ 1. If the salesperson who sells these units estimated monthly fixed costs at $4,000, what is her
monthly budgeted break-even point?
2. Why do you think actual sales of the TP28953A product were so much lower than budgeted? Give calculations (if
you think they are appropriate) to support your answer.
______________ 3. Compute the volume variance for the salesperson for the period covered by these data.
4. In total for the period covered, did the salesperson get a better or worse price than that originally budgeted? Give
numbers to support your answer.
______________ 5. Compute the mix variance for this salesperson for the period.
See the material on the next page for the data you use to answer this question.
Question IV Material
One of your salesman presented you with the following information about her sales for the past month. Use this
information to answer the questions on pages of the test.
Item
Number
TP28900A
TP28902A
TP28913A
TP28954A
TP28953A
TP28970A
TP28972ZA
Description
PA77600 TRANS. MOTOR KIT
PA77601 TRANS. MOTOR KIT
PA77629 BUMPER KIT
PA77648 FLATBED BOX
PA77649 FLATBED KIT
PA77650 FLATBED KIT
PA77651B STEERING HANDLE CLAMP
Totals
Std Cost
$90.8733
93.1095
4.0524
18.9491
30.1982
26.4883
4.5801
Budgeted
Budgeted
Unit Price
Quantity
$130.00
5
124.95
100
8.50
90
47.50
8
60.00
50
53.50
8
12.50
25
286
Actual
Quantity
3
65
111
1
5
4
1
190
Actual Units
Budgeted Budgeted
x Budget
x Budget
Actual
Cost
Revenue
Price
Cost
Revenue
$454.37
$650.00
$390.00
$272.62
$520.00
9,310.95
12,495.00
8,121.75
6,052.12
6,552.75
364.72
765.00
943.50
449.82
944.00
151.59
380.00
47.50
18.95
72.50
1,509.91
3,000.00
300.00
150.99
600.00
211.91
428.00
214.00
105.95
232.50
114.50
312.50
12.50
4.58
19.50
$12,117.94 $18,030.50 $10,029.25
$7,055.03 $8,941.25
Mgt413a Fall 98
Question IV (25 Points)
Use the information in the supplemental materials to answer this question.
1. Which customer generated the most sales?
Customer ____________________ Amount of sales _______________________
2. Which customer generated the most contribution margin?
Customer ____________________ Amount of margin _______________________
3. Which customer generated the biggest selling price variances?
Customer ____________________ Amount of price variance _______________________
4. Assume the total budgeted contribution margin for this period was $1,800 and total budgeted
units was 360. How much was the volume variance for the period? Show calculations.
___________________ Volume variance
5. Compute the mix variance for this case. Use the data from question 4 to answer this
question.
___________________ Mix variance
6. Describe one way you would use the data in this question to create value for a company.
You do not need all of this page to create an answer to this question.
Question IV Materials
Product
Box
Hammer
Shovel
Box
Hammer
Hammer
Shovel
Box
Shovel
Customer
Albert
Albert
Albert
Fred
Fred
Fred
Fred
Jack
Jack
Target
Selling
Price
Box
Hammer
Shovel
10
20
30
Quantity
10
70
80
40
50
30
20
60
20
Total
Sales
$80
1,190
1,600
480
1,000
600
700
600
600
Total
Variable
Cost
$50
1,050
1,200
200
750
450
300
300
300
380
$6,850
$4,600
Unit
Variable
Cost
5
15
15
Margin
$30
140
400
280
250
150
400
300
300
$2,250
Actual
Unit
Price
$8
17
20
12
20
20
35
10
30
Actual
Units x
Target
Price
$100
1,400
2,400
400
1,000
600
600
600
600
$7,700