Aromatic Coffee, Inc., sells two types of coffee, Colombian and Blue Mountain.
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156. Aromatic Coffee, Inc., sells two types of coffee, Colombian and
Blue Mountain. The monthly budget for U.S. coffee sales is based on a
combination of last year’s performance, a forecast of industry sales, and the
company’s expected share of the U.S. market.
The following information is provided for March:
Actual Budget
Colombian Blue Mountain Colombian Blue
Mountain
Sales in pounds 7,000 lbs. 8,000 lbs. 6,400 lbs. 8,600
lbs
Price per pound $25 $30 $25 $30
Variable cost per pound 11 14 12 13
Contribution margin $14 $16 $13 $17
Budgeted and actual fixed corporate-sustaining costs are
$60,000 and $72,000, respectively.
Required:
a. Calculate
the actual contribution margin for the month.
b. Calculate
the contribution margin for the static budget.
c. Calculate
the contribution margin for the flexible budget.
d. Determine
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance in terms of the contribution margin.
157. Harry’s Electronics
manufactures TVs and VCRs. During
February, the following activities occurred:
TVs VCRs
Budgeted units sold 17,640 66,360
Budgeted contribution margin per unit $90 $156
Actual units sold 20,000 80,000
Actual contribution margin per unit $100 $158
Required:
Compute the
following variances in terms of the contribution margin.
a. Determine
the total sales-mix variance.
b. Determine the total sales-quantity
variance.
c. Determine
the total sales-volume variance.
158. Speedy Printing manufactures soft cover
books. For January, the following information is available:
Budgeted
market size (units) 125,000
Budgeted
market share 18%
Budgeted average contribution margin
per unit $1.20
Actual market size (units) 100,000
Actual
market share 19%
Actual
average contribution margin per unit $1.22
Required:
Compute the market-share variance,
the market-size variance, and the sales-quantity variance in terms of the
contribution margin.
159. 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 20X5 are as follows:
Static Budget ZENITH House-Helper Total
Number sold 15,000 60,000 75,000
Contribution margin $3,750,000 $12,000,000 $15,750,000
Actual Results ZENITH House-Helper Total
Number sold 16,500 38,500 55,000
Contribution margin $6,200,000 $10,200,000 $16,400,000
Required:
a. Calculate
the contribution margin for the flexible budget.
b. Determine
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance in terms of the contribution margin.
160. 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 20X5 are as follows:
Static Budget ZENITH House-Helper Total
Number sold 15,000 60,000 75,000
Contribution margin $3,750,000 $12,000,000 $15,750,000
Actual Results ZENITH House-Helper Total
Number sold 16,500 38,500 55,000
Contribution margin $6,200,000 $10,200,000 $16,400,000
Required:
Compute the sales-mix variance and
the sales-quantity variance by type of vacuum cleaner, and in total. (in terms
of the contribution margin)
161. 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 20X5 are as follows:
Static Budget ZENITH House-Helper Total
Number sold 15,000 60,000 75,000
Contribution margin $3,750,000 $12,000,000 $15,750,000
Actual Results ZENITH House-Helper Total
Number sold 16,500 38,500 55,000
Contribution margin $6,200,000 $10,200,000 $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:
Compute the market-share variance
and market-size variance in terms of the contribution margin.
162. 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 20X5 are:
Static Budget Residential Office Total
Number of chairs sold 260,000 140,000 400,000
Contribution margin $26,000,000 $11,200,000 $37,200,000
Actual
Results Residential Office Total
Number of chairs sold 248,400 165,600 414,000
Contribution margin $22,356,000 $13,248,000 $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 20X5 was
only 2,200,000 chairs.
Required:
Compute the following variances in
terms of contribution margin:
a. Compute
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance.
b. 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.
CRITICAL THINKING
163. A company
might choose to allocate corporate costs to various divisions within the
company for what four purposes? Give an example of each.
164. An
electronics manufacturer is trying to encourage its engineers to design simpler
products so that overall costs are reduced.
Required:
Which
of the value-chain function costs (R&D, design, production, marketing,
distribution, customer service) should be included in product-cost estimates to
achieve the above purpose? Why?
165. Should
a company allocate its corporate costs to divisions?
166. List at
least three different levels of costs in a customer-cost hierarchy and an
example of each.
167. Why
would a manager perform customer-profitability analysis?
168. What
actions might be taken with an unprofitable customer?
169. Why would a manager want to calculate the
sale-mix and the sales-quantity variances? Market-share and market-size
variances?
156. Aromatic Coffee, Inc., sells two types of coffee, Colombian and
Blue Mountain. The monthly budget for U.S. coffee sales is based on a
combination of last year’s performance, a forecast of industry sales, and the
company’s expected share of the U.S. market.
The following information is provided for March: Actual Budget Colombian Blue Mountain Colombian Blue
Mountain Variable cost per pound 11 14 12 13 Budgeted and actual fixed corporate-sustaining costs are
$60,000 and $72,000, respectively. Required: a. Calculate
the actual contribution margin for the month. b. Calculate
the contribution margin for the static budget. c. Calculate
the contribution margin for the flexible budget. d. Determine
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance in terms of the contribution margin. 157. Harry’s Electronics
manufactures TVs and VCRs. During
February, the following activities occurred: TVs VCRs Budgeted contribution margin per unit $90 $156 Actual units sold 20,000 80,000 Actual contribution margin per unit $100 $158 Required:Compute the
following variances in terms of the contribution margin. a. Determine
the total sales-mix variance. b. Determine the total sales-quantity
variance. c. Determine
the total sales-volume variance. 158. Speedy Printing manufactures soft cover
books. For January, the following information is available: Budgeted
market size (units) 125,000 Budgeted
market share 18% Budgeted average contribution margin
per unit $1.20 Actual
market share 19% Actual
average contribution margin per unit $1.22 Required: Compute the market-share variance,
the market-size variance, and the sales-quantity variance in terms of the
contribution margin. 159. 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 20X5 are as follows: Number sold 15,000 60,000 75,000 Contribution margin $3,750,000 $12,000,000 $15,750,000 Actual Results ZENITH House-Helper Total Number sold 16,500 38,500 55,000 Contribution margin $6,200,000 $10,200,000 $16,400,000 Required: a. Calculate
the contribution margin for the flexible budget. b. Determine
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance in terms of the contribution margin. 160. 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 20X5 are as follows: Number sold 15,000 60,000 75,000 Contribution margin $3,750,000 $12,000,000 $15,750,000 Actual Results ZENITH House-Helper Total Number sold 16,500 38,500 55,000 Contribution margin $6,200,000 $10,200,000 $16,400,000 Required: Compute the sales-mix variance and
the sales-quantity variance by type of vacuum cleaner, and in total. (in terms
of the contribution margin) 161. 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 20X5 are as follows: Number sold 15,000 60,000 75,000 Contribution margin $3,750,000 $12,000,000 $15,750,000 Actual Results ZENITH House-Helper Total Number sold 16,500 38,500 55,000 Contribution margin $6,200,000 $10,200,000 $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: Compute the market-share variance
and market-size variance in terms of the contribution margin. 162. 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 20X5 are: Static Budget Residential Office Total Number of chairs sold 260,000 140,000 400,000 Contribution margin $26,000,000 $11,200,000 $37,200,000 Number of chairs sold 248,400 165,600 414,000 Contribution margin $22,356,000 $13,248,000 $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 20X5 was
only 2,200,000 chairs. Required: Compute the following variances in
terms of contribution margin: a. Compute
the total static-budget variance, the total flexible-budget variance, and the
total sales-volume variance. b. 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. CRITICAL THINKING163. A company
might choose to allocate corporate costs to various divisions within the
company for what four purposes? Give an example of each. 164. An
electronics manufacturer is trying to encourage its engineers to design simpler
products so that overall costs are reduced. Required: Which
of the value-chain function costs (R&D, design, production, marketing,
distribution, customer service) should be included in product-cost estimates to
achieve the above purpose? Why? 165. Should
a company allocate its corporate costs to divisions? 166. List at
least three different levels of costs in a customer-cost hierarchy and an
example of each. 167. Why
would a manager perform customer-profitability analysis? 168. What
actions might be taken with an unprofitable customer? 169. Why would a manager want to calculate the
sale-mix and the sales-quantity variances? Market-share and market-size
variances?
