The Chair Company manufactures two modular types of chairs, one for the residential market, and the other for the office market
admin
151. 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 20×3 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 20×3 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
152. A company
might choose to allocate corporate costs to various divisions within the
company for what four purposes? Give an example of each.
153. 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?
154. List at
least three different levels of costs in a customer-cost hierarchy and an
example of each.
155. Why would
a manager perform customer-profitability analysis?
156. Why would a manager want to calculate the
sale-mix and the sales-quantity variances? Market-share and market-size
variances?
151. 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 20×3 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 20×3 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
THINKING152. A company
might choose to allocate corporate costs to various divisions within the
company for what four purposes? Give an example of each. 153. 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? 154. List at
least three different levels of costs in a customer-cost hierarchy and an
example of each. 155. Why would
a manager perform customer-profitability analysis? 156. Why would a manager want to calculate the
sale-mix and the sales-quantity variances? Market-share and market-size
variances?
