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Question 1 Clean-It-Up manufactures industrial dryers and washers. The following information is available for February: Dryers...

Question 1

Clean-It-Up manufactures industrial dryers and washers. The following information is available for February:

Dryers

Washers

Budgeted units sold

10,000

40,000

Actual sales (in units)

8,820

33,180

Actual selling price per unit

$700

$900

Budgeted selling price per unit

$710

$930

Budgeted market share

20%

25%

Actual market share

25%

24%

Budget cont. margin /unit

$275

$375

REQUIRED:

  1. Determine the sales-mix and sales-quantity variances.
  2. Determine the market-share and market-size variances.
  3. Discuss the potential causes of variance.

Solutions

Expert Solution

a Sales Mix Variance
Actual units sold*(Actual Mix-Budgeted Mix)*Budgeted Contribution per unit
42000*(.21-.2)*275 115500 F
42000*(.79-.8)*375 157500 U
420000 U
Sales Qty Variance
(Actual unit sold-Budgeted Unit Sold)*Budgeted Mix*Budgeted Contribution per unit
(42000-50000)*.2*275 440000 U
(42000-50000)*.8*375 2400000 U
2840000 U
b Market Size Variance
(Actual Market Size-Budgeted Market Size)*Budget Market Share*Budgeted Contribution
(35280-50000)*.2*275 809600 U
(138250-160000)*.25*375 2039063 U
2848663 U
Market share Variance
Actual Market Size *(Actual Market Share-Budgeted Market Share)*Budgeted Contribution per unit
35280(.25-.2)*275 485100 F
138250(.24-.25)*375 518438 U
33338 U
c Causes of Variance
1 Less Exp on Advertisement
2 Demand of the product gets reduced
3 Sometimes there is a change in Technology

ekkarill92 answered 1 year ago
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