Question

7. Bobs Appliances manufactures industrial dryers and washers. Bobs manufactures two washers (Front Loaded and Top Loaded). Data for estimates and actual results for washers 2020:

                                               Front             Top             

Actual units sold                  9,000         41,000

Budgeted sales                  8,000         32,000

Actual selling price              $700            $900

Budgeted selling price        $710            $930

Budget contribution/unit     $275            $375

Actual contribution/unit        $200            $300

Budgeted market size 200,000 units

Actual market size 280,000

Required:

Determine the following:

a. Sales-mix and sales-quantity variances

b. Market-share and market-size variances (for calculation purposes round combined actual and budgeted market share percentages to two decimal places.)

Answer 1

Selling Mix Variance - (Ac SPV - Front (Actual units - budgeted units) x Budgeted per unit contribution (9000 - 8000) < $275 1000 units x $275 $ 2,75,000 F T SPV - Top (41000 - 32000) x $375 9000 units x $375 $ 33,75,000 F Standard Mix: Budgeted Sale Actual Sale in Actual Sale Std Mix 9000 10000 41000 40000 50000 50000 Front Top % 20% 80% 8000 32000 40000 070 = Sales Quantity Variance SQV - Front (Budgeted Sales - Units sale at std. mix) x Standard Contribution (8000 - 10000) < $275 2000 units x $275 $ 5,50,000 F SQV - Top (320000 - 40000) < $375 8000 units x $375 $ 30,00,000 F

= Budgeted Market Share Front Budgeted Sales / Budgeted mkt size x 100 8000 / 200000 x100 4% 32000 / 200000 x 100 16% Top Market Size Variance = (Actual Market size - Budgeted mkt size) x Budgeted mkt share x Budgeted contribution MSV - Front (280000 - 200000) x 4% x $275 80000 x 4% x 275 $ 8,80,000 F T MSV - Top (280000 - 200000) x 16% x $375 80000 x 16% x 375 $ 48,00,000 F Actual Market Share Front Actual Sales / Actual mkt size x 100 9000 / 280000 x100 3.21% 41000 / 280000 x 100 14.64% Top Market Share Variance Actual market size x (Actual Market share - Budgeted mkt share) x Budgeted contribution MSV - Front 280000 x (3.21% - 4.00%) < $275 280000 x 0.79% x $275 $ 6,08,300 MSV - Top 280000 x (14.64% - 16.00%) < $375 280000 x 1.36% x $375 $ 14,28,000 U

In case of any doubts or Issues, please comment below