The Badgers are a pro sports team. The teams sells three different type of tickets: Deluxe,...
The Badgers are a pro sports team. The teams sells three different type of tickets: Deluxe, Lower level and upper level. Information from the prior year is as follows: (TIP- Revenue Variances)
|
BUDGET: |
Contribution Margin |
Number of |
|
Per seat |
Seats |
|
|
deluxe |
$ 100 |
2,000 |
|
lower level |
50 |
6,000 |
|
upper level |
20 |
8,000 |
|
ACTUAL: |
Contribution Margin |
Number of |
|
Per seat |
Seats |
|
|
deluxe |
$ 110 |
2,200 |
|
lower level |
50 |
6,200 |
|
upper level |
20 |
8,400 |
|
Total Market Size |
||
|
Budget |
40,000 |
|
|
Actual |
50,000 |
Required:
- Calculate the Sales Volume Variance for each product.
- Calculate the Sales Quantity Variance for each product.
- Calculate the Market Share Variance in terms of contribution margin.
- Calculate the Market Size Variance in terms of contribution margin.
Homework Answers
a. Sales Volume Variance"
Sales Volume Variance =(Actual Units-Budgeted units)*Budgeted Contribution per unit
Delux : (2200-2000)*$100=$20,000.... Favorable
Lower Level : (6200-6000)*$50=$10,000.....Favorable
Upper Level : (8400-8000)*$20=$8,000.....Favorable
b Sales Quantity Variance:
Sales Quantity Variance :
Total Budgeted Sales( units)=2000+6000+8000=16000
Proportion of Delux =2000/16000=0.125
Proportion of Lower Level =6000/16000=0.375
Proportion of Upper Level=8000/16000=0.5
Total Actual sales=2200+6200+8400=16800
UNIT SALES AT STANDARD MIX:
Delux : 0.125*16800=2100
Lower Level : 0.375*16800=6300
Upper Level : 0.5*16800=8400
Sales Quantity Variance =(Budgeted SalesQuantity -Unit sales Quantity at standard Mix)* Budgeted Unit Contribution
Delux : (2000-2100)*$100=$10,000 Favorable
Lower Level : (6000-6300)*$50=$15,000..Favorable
Upper Level : (8000-8400)$20=$8,000.Favorable
Market Size Variance :
Budgeted Sales =16000 units
Budgeted Market Size=40000
Budgeted market share =16000/40000=0.4
Budgeted unit Contribution =(2000*$100+6000*$50+8000*$20)/16000=$41.25
Market Size Variance =(Actual Market Size-Budgeted Market Size)*Market Share*Budgeted unit contribution
Market Size Variance =(50000-40000)*0.4*41.25=$165,000 Favorable
Market Share Variance =(Actual Market Share-Budgeted Market Share)*Actual Market Size* Budgeted unit contribution
Actual Sales =2200+6200+8400=16800
Actual Market size =50000
Actual Market Share =16800/50000=0.336
Market Share Variance =(0.336-0.4)*50000*$41.25=$132,000 Unfavorable
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